Once you determine that filing for bankruptcy protection is the right debt-relief solution for you, it is important to explore which chapter of personal bankruptcy would be of most benefit to you. Every bankruptcy case is unique and your specific situation, along with your goals, will help determine whether Chapter 7 or Chapter 13 is right.
Chapter 7 bankruptcy is the most common chapter, generally the quickest and simplest, and is typically completed in four to six months. While that sounds enticing, Chapter 13 offers benefits to debtors that are not available to debtors who file for Chapter 7 bankruptcy.
For people who do not qualify for Chapter 7, or who would otherwise benefit from additional protections, filing for Chapter 13 bankruptcy may be the right option.
Additional Benefits of Chapter 13 Bankruptcy
Chapter 13 bankruptcy creates a three to five year repayment plan, allowing debtors to pay back some, none, or all of their debt, depending on their specific situation. Because a monthly payment is required, to qualify for Chapter 13 you must have a steady source of income.
The additional benefits of Chapter 13 not available in Chapter 7 include:
Catch up on mortgage arrears: Missed mortgage payments from before the date you file for bankruptcy can be included in your Chapter 13 plan. This gives you the opportunity to catch up on your mortgage arrears and save your home from foreclosure. During the course of the Chapter 13 case you will have to continue to make your regular monthly mortgage payment as it becomes due and the monthly Chapter 13 plan payment to the Bankruptcy Trustee.
Eliminate an underwater second mortgage: Debtors with underwater homes may be eligible to completely eliminate a second mortgage with a lien strip. To be eligible for a lien strip, the first mortgage on your home must be underwater (meaning you owe more on the first mortgage than the home is worth). A second mortgage or other eligible liens are only stripped after completion of the Chapter 13 bankruptcy plan.
Make up missed car payments: Missed car payments from before the date you file can be included in your repayment plan. This gives you the opportunity to save your car from repossession. Similar to home mortgage payments, during the course of the Chapter 13 case you must continue to make your regular monthly car payment and the monthly bankruptcy plan payment.
In Chapter 13 bankruptcy, each month you are required to make a payment to the Bankruptcy Trustee assigned to your case, then he or she distributes those payments to your mortgage lender, car note holder, and other creditors to whom you owe money.
Filing for Bankruptcy Protection
To explore which chapter of bankruptcy would be right for you, we invite you to meet with us for a free, no-obligation consultation. Here at the Law Office of Barbara B. Braziel we will make sure you understand the protections and benefits of bankruptcy and how filing with affect you and your family.
Call us today at (912) 351-9000 or contact us to schedule a free consultation.
We proudly serve the people of Savannah, GA and the surrounding areas, including Richmond Hill, Hinesville, Pooler, Port Wentworth, Tybee Island, Clyo, Ellabel, Midway, Ludowici, Springfield, Pembroke, Brooklet, and Garden City.
We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.