5 Biggest Reasons People File Chapter 13
When preparing to file for bankruptcy, it’s always best to gather as much information about the type you want to file before starting the process. Sure, hiring expert Chapter 13 bankruptcy attorneys in La Mesa will ensure a smooth process, but what if you’re just trying to assess the different types of bankruptcy to choose the most appropriate one for your case? That is when you should pay attention to the biggest reasons people file Chapter 13.
Why do people file Chapter 13?
The reasons for filing bankruptcy are many, as financial problems can be caused by a wide range of factors, from medical bills and student loans to credit card debt and house mortgages. Bankruptcy is a certain way out of debt, but only if you choose the right chapter. Here are the biggest reasons for choosing Chapter 13 over other options.
To prevent foreclosure, garnishment, and repossession
Once you begin the process of Chapter 13 bankruptcy, all of your creditors have to immediately cease all collection operations against you. This means they are not allowed to make wage garnishments, attempt foreclosure on your property, or take possession of your vehicle. This is known as automatic stay, and it lasts for the entire duration of the process, which can take up to five years.
To get more time to catch up on a vehicle or house loan
Chapter 13 grants you ample time to get back on track and start repaying your overdue payments. Chapter 13 breaks down all your existing debt to different creditors into a single manageable monthly payment, which allows you to stay on top of the repayments without unnecessary financial strain.
To save property
Bankruptcy grants individuals exemptions that protect their property up to a certain amount of money. However, if you own too much, you’re at risk of losing the property above the exemption margin for your state.
This is where Chapter 13 comes in. This type of bankruptcy grants debtors an opportunity to incorporate the value of your assets that are above your state’s exemption limits and to pay off those assets through the formulated repayment plan.
Because their income is too high
Depending on how much income you have, you will be unable to qualify for Chapter 7, allowing them to qualify for Chapter 13 instead and find financial relief through this type of bankruptcy. This is usually a good thing, as Chapter 13 consolidates all our debt into monthly payments you can keep making without them drastically reducing your quality of life.
To get rid of specific types of debt
For example, Chapter 7 bankruptcy does not allow you to eliminate all the debts you’ve incurred over the years, whereas Chapter 13 does. It allows you to discharge certain types of tax debt, government penalties and fines, debts involving embezzlement and fraud, as well as debts resulting from an intentional injury to a property or person.
Who are the leading Chapter 13 bankruptcy attorneys in La Mesa?
There are many benefits to filing Chapter 13, and that is why individuals frequently choose this favorable type of bankruptcy to get out of their financial trouble. If you want to do the same, it’s time to get better informed about Chapter 13. First, find answers to the most common questions about Chapter 13 and see how debt consolidation and Chapter 13 differ. Also, it’s worth inquiring about whether or not you can buy a house during Chapter 13, just to make sure you’ve got everything covered.
Luckily, you have Chang & Diamond here to help you with all of this. We are seasoned veterans of the bankruptcy game and we have helped numerous clients across La Mesa and the area regain their financial independence. We have the necessary knowledge and qualifications and we are completely dedicated to every single one of our clients. Come in for a free consultation, give us the information we need, and we’ll start creating a plan while you pay the Pacific Southwest Railway Museum a visit. Reach out to us today!