Benefits of the Powerful Chapter 13 Bankruptcy

Have you ever wondered who benefits from filing a Chapter 13 Bankruptcy? A Chapter 13 Bankruptcy benefits individual and married consumers by addressing and resolving a number of the issues life throws their way. Throughout this blog, I will present three of the major benefits a Chapter 13 Bankruptcy has to offer.

The most obvious issue addressed in a Chapter 13 Bankruptcy is unsecured creditors. Throughout the duration of their payment plan, a Chapter 13 client is required to repay a portion of their unsecured debt. This portion can range from 0% to 100% of the client’s total liability and lasts for three to five years. The percentage of pay back and duration of plan are specific to each individual case, however, are generally determined using household size and gross annual income. While the benefits of a low percentage plan are obvious, you may wonder why a consumer would choose to file their case if a high percentage plan is proposed. Even if a consumer is required to repay 100% of their unsecured debts, they are able to do so at a 0% interest rate without the accrual of late fees and/or additional charges. The balances of all accounts are frozen upon filing and cannot increase. In addition, consumers are protected from summons, lawsuits, wage garnishments, levies, collection notices and, not to mention, harassing phone calls associated with creditors during the duration of their plan. Once a Chapter 13 plan is complete, the remaining balances on all unsecured accounts are discharged.

Many consumers also file for Chapter 13 Bankruptcy in an effort to address mortgage arrears. With the state of the economy today, many individuals have fallen behind on mortgage payments and found themselves drawing nearer to default or foreclosure. A Chapter 13 Bankruptcy can cure these arrears by putting the amount required to become current through the plan. Mortgage arrears must be paid in full during the first 36 months of the plan, and it is the client’s responsibility to remain current on both first and second mortgages moving forward. The same rule applies for back property taxes and back hoa dues. For those consumers who have fallen too far behind and are emotionally ready to part with their properties, a Chapter 13 Bankruptcy can surrender their mortgages in full and final. In other words, the consumer will not be held liable for any second or third mortgages post filing all while postponing the date of their Trustee Sale and allowing additional time to make a home elsewhere.

Lastly, a Chapter 13 Bankruptcy can benefit consumers with outstanding IRS or Franchise Tax liability. All liability will be paid in full at a 0% interest rate throughout the duration of the Chapter 13 plan. Upon filing, all garnishments, levies, installment payments, and notices with accruing interest and late fees will cease, and the balances owed will be addressed through the Bankruptcy. Moving forward post filing, it is the consumer’s responsibility to refrain from incurring future tax debt.

In conclusion, addressing unsecured debts, mortgage arrears, and tax liability are just three of the many benefits of the powerful Chapter 13 Bankruptcy. The San Diego bankruptcy attorneys at Steigerwalt Law Firm have extensive experience representing individuals through bankruptcy proceedings. We are committed to helping everyday people who have insurmountable credit card bills, medical bills, and other types of debt. Contact the bankruptcy attorneys at Steigerwalt Law Firm today for expert legal representation. Find out why we are one of the largest filers of consumer bankruptcy in San Diego.

Stay tuned for additional benefits and insight into a complex yet gainful Bankruptcy Chapter.