In the last few months or years have you been getting hounded by creditors and you just can’t take it anymore? Maybe now is the time to look at filing for bankruptcy. But, which is best for you? Chapter 7 or Chapter 13? Understanding the difference will help you make your decision.
There are many benefits to both Chapter 7 and Chapter 13 bankruptcy. Chapter 13 works differently than a Chapter 7 bankruptcy. It’s important to know the advantages of Chapter 13 bankruptcy.
When you file for Chapter 13, it allows you to consolidate all of your debts into one monthly payment. This reduces the amount of payments going out. Instead of paying for five credit cards, your car, or your house; it all comes in one monthly payment.
Imagine paying a fraction of the money that you pay in debt each month. That is what Chapter 13 will do. In certain cases, the court will allow for you to pay as little as 10% of your unsecured debt. An unsecured debt are things like credit cards, medical bills, etc. The remaining 90% of the debt, in this case, would be wiped clean. In other cases, unsecured debt can actually be completely wiped away in most cases and not paid back at all.
When filing for Chapter 13 it allows you to stop a foreclosure on your house temporarily. While the details of your Chapter 13 are being worked out for your debt and payment arrangement the foreclosure gets suspended. Your mortgage could become part of your monthly payment, which allows you to avoid foreclosure altogether. Just make sure to make all of your mortgage payments on time after your bankruptcy filing. Then, catch up on your payments and your home will remain yours.
If you find yourself wondering what life after bankruptcy would be like without all the debt hanging over your head, call Castle Law Office at 816-842-6200 to speak with an attorney. Or you can email us and schedule your free consultation.