chapter 13 bankruptcy

Long Term Financial Advantages to Chapter 13 Bankruptcy

Chapter 13 Bankruptcy is a payment plan that lasts between 3 to 4 years. The length of the payment plan can be discouraging for some people, and Chapter 7 Bankruptcy may seen initially more preferable but it is not. There are many long term financial advantages to Chapter 13 Bankruptcy, including some that are not available in Chapter 7. Some of the advantages to a Chapter 13 Bankruptcy include:

  • Allowing you to pay what you can afford
  • Discharging debts you do not pay in full
  • Saving your home from foreclosure
  • Removing a 2nd or higher mortgage

In this article, The Law Offices of Nicholas J Del Pizzo, is going to highlight these advantages and help you to understand why filing for a Chapter 13 bankruptcy may be the best solution for your long term financial health.

The pay what you can afford solution

In Chapter 13 Bankruptcy you can make one monthly payment to a bankruptcy trustee that covers all of your debts. Your payment is determined by your budget, which you can put together with your bankruptcy attorney. This budget must be approved in bankruptcy court. Your actual budget will be a combination of your monthly expenses, IRS standards, and the standards of the Chapter 13 trustee. Your income minus the above combination of expense results in the amount you pay to the bankruptcy trustee every month. This amount is often times referred to as your discretionary income.

Even if you do not have discretionary income above what you pay in expenses due to a job loss, expensive monthly auto payments, or other factors your Chapter 13 Bankruptcy attorney can help you create a plan that reorganizes loan payments or defers payments until you have enough income.

Discharging your debts in Chapter 13

Since you are paying what you can afford, you may not be able to pay 100% of your debts over the last 3 to 5 years. In a majority of Chapter 13 bankruptcy cases people do not pay back 100% of what is owed. The amount of debt you do not pay back over the course of your Chapter 13 bankruptcy plan is handled in the same manner if it were a Chapter case. Your dischargeable debts are wiped-out, so that you can start fresh. The advantage to this in Chapter 13 bankruptcy is that it provides people with the most powerful debt repayment plan.

Save your home

In Chapter 13 bankruptcy it is possible to still save your home. As long as you file your Chapter 13 bankruptcy prior to the foreclosure sale date, then you can take advantage of this Chapter 13 benefit. In order to keep your home in Chapter 13, you must be able to make the regular monthly mortgage payments when it is due. As long as you can make your monthly payments on time, then having 3 to 5 years to payback arrearages can help you save your home from foreclosure.

Remove that 2nd or higher mortgage

In order to qualify for this benefit the value of your home must be equal or less than the amount owed on your first mortgage on the day your bankruptcy case is filed. The careful calculation on the value of your home should be performed by an attorney experienced in the nuances of making these calculations

About the Law Offices of Nicholas J Del Pizzo

At the Law Offices of Nicholas J Del Pizzo we help clients find the debt relief they need. Reduce the stress and stop the foreclosure process on your home. We can help. For more information or to schedule an appointment with an experienced Baltimore Foreclosure lawyer please call our office or visit our contact us page.

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