Here’re Some Of The Lesser Known Benefits Of Chapter 13 Bankruptcy

by Recovery Law Group Recovery Law Group

Chapter 13 bankruptcy is one of the most recommended payment plans that endures over the span of 3-5 years. The duration of this payment plan might seem unfavorable to some people, however it has many benefits too and some of what are not even available in Chapter 7 Bankruptcy. So, it does make an ideal solution to build a long term financial health.

A few of the benefits of Chapter 13 bankruptcy are:

·         It allows you to pay the amount you can afford

·         Eliminates dues you don’t pay off in full

·         Saves your properties, such as home and car from foreclosure

·         Removes second or any high mortgage

The ‘Pay what you can afford’ is a standalone benefit

Chapter 13 bankruptcy allows you to pay your bankruptcy trustee once a month that will cover all of your outstanding. Now, how much you will be paying is determined by your budget that you piece together with a bankruptcy lawyer for approval by the Bankruptcy Court. It’s your budget that decides on the final amount you will be paying off to your bankruptcy trustee.

Your budget is typically an arrangement of your monthly expenses, Chapter 13 Trustee standards and IRS standards. Your income subtracted the aforementioned mixture of expenses leads to the amount you will be paying to your bankruptcy trustee every month. The amount paid to the bankruptcy trustee is formally called ‘Discretionary income.’

Keep your home by filing Chapter 13 bankruptcy

In Chapter 13 bankruptcy you’re allowed to merge your past mortgage dues and pay them altogether as per the repayment plan. In Bankruptcy, your past mortgage dues are known as ‘arrearages.’ If you file Chapter 13 bankruptcy before the foreclosure sale date, you can greatly benefit from Chapter 13 bankruptcy.

There’s though one key stipulation to holding onto your home using Chapter 13 bankruptcy and it is that you have to be able to make monthly mortgage payments without a fail. On the condition that you will be regularly making your monthly mortgage payments, you can save your home by the time your repayment plan is complete and over.

Discard 2nd or higher mortgages

If you are able to pay your first mortgage only after your bankruptcy is filed, here’s a solution – lien stripping. Lien stripping will allow you to hold on to your house while discarding 2nd or higher mortgages, so that you only have first mortgage to pay. However, to qualify for lien stripping, the market value of your house has to be equal or lesser than the amount you owe on your very first mortgage. This ultimately requires a careful valuation of your house prior to your case is filed.

And, this is where Recovery Law Group – one of the largely operated and experienced consumer law protection firms in the U.S.A. – recommends you consulting with an attorney.

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Created on May 15th 2020 01:28. Viewed 423 times.


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