CHAPTER 13 BANKRUPTCY

 

Chapter 13 bankruptcy provides individuals with a structured repayment plan to address their debts while allowing them to retain their assets, including their homes.  Chapter 13 can offer several benefits:

 

Foreclosure Prevention

One of the primary advantages of Chapter 13 is its ability to halt foreclosure proceedings. By filing for Chapter 13 bankruptcy, individuals can trigger an automatic stay, which immediately stops foreclosure actions. This gives homeowners an opportunity to catch up on missed mortgage payments and potentially save their homes.

 

Repayment Plan

Chapter 13 allows individuals to create a manageable repayment plan to address their debts, including mortgage arrears. The plan typically spans three to five years, during which individuals make regular payments to a bankruptcy trustee who then distributes the funds to creditors. This structured approach helps individuals catch up on missed mortgage payments over time, reducing the risk of foreclosure.

 

Asset Retention

Unlike Chapter 7 bankruptcy, which may involve the liquidation of assets, Chapter 13 allows individuals to retain their property, including their homes. This is particularly beneficial in the context of foreclosure, as it provides an opportunity to resolve mortgage delinquencies while maintaining ownership.

 

Debt Consolidation

Chapter 13 allows individuals to consolidate their debts into a single repayment plan. This can make managing finances more straightforward, as individuals make one monthly payment to the bankruptcy trustee instead of dealing with multiple creditors. It provides a structured and organized approach to debt repayment.

 

Extended Timeline

Chapter 13 provides a longer timeline for debt repayment compared to other bankruptcy chapters. This extended period allows individuals to catch up on missed mortgage payments gradually, making it more feasible to avoid foreclosure and regain financial stability.

 

It's important to note that the benefits of Chapter 13 bankruptcy may vary depending on individual circumstances. Consulting with Shepherd and Wood, LLP is crucial to fully understand the implications and determine the best course of action based on your specific situation.