When deciding if you should file for bankruptcy, one of the biggest decisions you’ll make will be which type of bankruptcy to file for. Keep reading to learn what a bankruptcy attorney Chapter 13 in Claremont CA believes are the advantages of Chapter 13. Then contact Law Offices of Terrence Fantauzzi at (909) 552-1238 to talk to a bankruptcy attorney who can help you.
You only pay what you can afford
Chapter 13 permits you to pay a bankruptcy trustee a single monthly payment that covers all of your debts. Your payment is decided by the budget you create with your bankruptcy counsel and submit to the Bankruptcy Court for approval. You can pay what you can afford thanks to your budget.
Your budget is based on your real monthly spending, IRS guidelines, and the Chapter 13 Trustee’s guidelines. The amount you pay to a bankruptcy trustee each month is determined by your income minus the aforesaid combination of costs. Your discretionary income refers to the amount you pay to the trustee.
Even if you now have little disposable income due to job loss, expensive monthly auto payments, or other causes, your Chapter 13 bankruptcy attorney can frequently help you establish a plan that reorganizes or defers expensive debt payments until you have adequate cash.
Debts are discharged in Chapter 13 bankruptcy
You may not be able to pay off all of your debt in 3-5 years since you are only paying what you can afford. In the vast majority of Chapter 13 bankruptcy proceedings, the debtor does not repay the entire amount owed. In reality, most people only pay back a small portion of what they owe.
The amount of debt you do not repay over the course of your Chapter 13 Plan is handled in the same way as it would be in a Chapter 7 — your dischargeable debts are wiped away, giving you a fresh start.
With Chapter 13 Bankruptcy, you can keep your home
You can pay back past due mortgage payments in Chapter 13 Bankruptcy over the course of 3-5 years under your repayment plan. Arrearages on your mortgage are referred to as “arrearages” in bankruptcy. You can take advantage of this Chapter 13 benefit if you file your Chapter 13 bankruptcy before the foreclosure auction date.
There is one key restriction to entering Chapter 13 bankruptcy to maintain your house. It requires that when your lawsuit is filed, you must be able to make your normal monthly mortgage payments when they are due. If you can keep up with your normal monthly payments, having 3-5 years to pay off your arrearages will help you avoid foreclosure.
Remove any second or higher-level mortgages
What if you can only pay your first mortgage after you submit your case? We may have a solution for you called lien stripping that will allow you to keep your home. Lien stripping allows you to get rid of your second and higher mortgages, leaving you with only your first mortgage.
To qualify for a lien removal, the value of your house on the day your bankruptcy case is filed must be equal to or less than the amount owing on your initial mortgage. Before your case is filed, an attorney knowledgeable in the subtleties of performing these calculations should carefully calculate the worth of your house to ensure that your lien strip has the highest chance of being accepted.
Your second or higher mortgage will not need to be paid during the 3-5 years you are in the plan if your lien strip is allowed by the court. Mortgage liens will be removed from your property and included in your discharge at the conclusion of your bankruptcy.
Learn how Chapter 13 bankruptcy can help you with your financial situation
There are many more Chapter 13 bankruptcy advantages that may be accessible in your circumstance. If you believe Chapter 13 bankruptcy is an option for you, contacting with a bankruptcy lawyer at Law Offices of Terrence Fantauzzi as soon as possible will help you start on track to filing Chapter 13 bankruptcy and reaping all of the perks and advantages that come with it.