Regaining Financial Stability: Five Benefits of Chapter 13 Bankruptcy Over Debt Repayment
I love Chapter 13 bankruptcy because it really allows the borrower to get the power back in the creditor-borrower relationship. I use them to save people’s houses and to potentially strip second mortgages and judgment liens.
You can save a car that is about to be repossessed, discharge some taxes, maybe discharge student loans, get your drivers license back, stop garnishments, sometimes stop evictions, and just generally put your financial life back in order while paying back what you can afford over 3-5 years.
Debt repayment plans, on the other hand, involve making regular payments to creditors to pay off debt over time. While both options aim to help individuals regain financial stability, here are five benefits of Chapter 13 bankruptcy over debt repayment:
1. Protection from creditors: When you file for Chapter 13 bankruptcy, an automatic stay is put in place, which means that creditors cannot take any collection actions against you. This protection can be crucial in stopping foreclosure, wage garnishment, and other collection activities that can exacerbate your financial problems.
2. Reduced payments: Under Chapter 13, you will work with a bankruptcy trustee to create a repayment plan that is tailored to your income and debts. In many cases, this plan can significantly reduce your monthly payments, making it easier to manage your finances.
3. Discharge of some debts: Chapter 13 allows for the discharge of some debts that cannot be discharged in debt repayment plans, such as certain tax debts, student loans, and even some debts assumed as part of a property settlement agreement.
4. Credit score improvement: While bankruptcy will have a negative impact on your credit score, the effects can be less severe with Chapter 13 than with debt repayment. This is because Chapter 13 shows that you are taking steps to repay your debts, whereas debt repayment shows that you are struggling to manage your debts.
5. Faster debt resolution: Debt repayment plans typically last for several years, while Chapter 13 repayment plans last for 3-5 years. This means that you can resolve your debts faster with Chapter 13, allowing you to move on with your life and rebuild your financial stability more quickly.
In summary, Chapter 13 bankruptcy can provide individuals with protection from creditors, reduced payments, the discharge of some debts, credit score improvement, and faster debt resolution compared to debt repayment plans. However, it is important to speak with a bankruptcy attorney to determine which option is right for your specific financial situation.
Contact Bankruptcy Lawyers Serving Lynnwood & Snohomish County Today
Steven Palmer of Curtis, Casteel & Palmer, PLLC is here to help you every step of the way in the Chapter 13 bankruptcy process. Speak with a Bankruptcy Lawyer today to discover your best options.