Compared with other Chapters of bankruptcy and debt relief, Chapter 13 can offer the strongest protections for your home, car and other important possessions. There are very few programs that function like Chapter 13, which was designed to stop pending foreclosure and repossession while giving you the means to protect your home and cars for years to come.
How could Chapter 13 work to protect your property? Chapter 13 bankruptcy works in two ways to secure and protect your property. First, after you file Chapter 13 the automatic stay kicks in to stop a pending foreclosure, a repossession and harassment or any kind of contact from the creditors. Then the Chapter 13 bankruptcy plan works with you to create a process to pay off your back debt and protect your property for the future. When you file for bankruptcy, the automatic stay will kick in immediately. This is a powerful Bankruptcy court order that could save your house. The automatic stay prevents creditors from taking any collection action against you on the debts included in your bankruptcy filing, this includes stopping:
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Foreclosure, even if it's already begun and up to the sale date Repossession of cars, boats and other property Wage garnishment Harassing phone calls and letters Lawsuits
So if you're worried that you may lose your home or car very soon then consider whether filing bankruptcy could be your best course of action. It may be difficult to get out from under old debts when you're dealing with the stress and pressure caused by threats of foreclosure. Chapter 13 was designed to provide breathing room. Then, once you're under its protection and have stopped the pending foreclosure, you may begin to take steps to regain control of your finances through bankruptcy's other tools.
Filing for Chapter 13 bankruptcy is designed to freeze your current financial situation. Then a court order will typically reduce your debts. The goal here is to make the debt more manageable. When you file Chapter 13, you and your bankruptcy attorney will meet with the court trustee to come up with an affordable repayment plan. This plan will include the debt from many sources, including credit cards, home mortgage, car loans, personal loans and even medical and utility bills. All the debt is prioritized with the secured debt, like your mortgage and car loan, being the first to be paid. After that, unsecured debt from credit cards and medical bills etc. will be paid with what is left and often times reduced, sometimes significantly. The bankruptcy trustee works with you using realistic expectations based on your income, and that in a nutshell is how the repayment plan is created. Each month you'll make a payment to the trustee who will then handle your creditors in the court-appointed order. During this time you will be fully protected by the automatic stay on the debts you've included in your bankruptcy filing, which means you shouldn't have to worry about bothersome phone calls from creditors. And since your payments go to a trustee, you won't have to worry about dealing with your creditors at all. The whole process typically lasts 3-5 years, and it's designed to have all of your old debts cleared by the time you are finished. So when you emerge from Chapter 13 bankruptcy you should be all set for a fresh start, free from your past debts.
Will Chapter 13 be able to help you clear your debts and protect your home from foreclosure? You should get answers to your particular situation when you speak with a local Chapter 13 bankruptcy attorney.
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