Benefits Offered Through Chapter 13 Bankruptcy

26 October 2021
 Categories: Law, Blog


Using bankruptcy to find relief from your debt problems might be the solution you need. You can find out by talking to a bankruptcy lawyer about your financial situation. If you qualify for Chapter 13, the attorney will help you learn what this branch involves, including the benefits. Here are some of the benefits your lawyer will tell you about if you want to file for Chapter 13 bankruptcy.

It Stops Foreclosures

If you had to pick between Chapter 7 and Chapter 13, you might have to lean toward Chapter 13 if you face foreclosure on your house. Chapter 13 is the only branch of these two that stops a foreclosure from occurring. The foreclosure process takes time for the lender to complete, but if you already received the documents from your lender, you will want to move quickly. If you do not stop the foreclosure by paying your entire past-due balance, you could lose your home. When you file your Chapter 13 case, your lender must also stop the foreclosure until you complete the plan.

It Offers Lien-Stripping

The second benefit is the process known as lien-stripping. When you owe more money on your house than its current value, you might be able to use this process in your Chapter 13 case. To do so, you will need to have a second mortgage on your home. Chapter 13 might erase your second mortgage, but it depends on the value of your home versus the total amount you owe.

It Makes Your Payments Affordable

The next benefit of Chapter 13 is it makes your payments affordable. If you can barely pay your bills right now, you might have no way to catch up on your past-due balances. Chapter 13 provides an affordable payment plan that you follow throughout your entire case.

It Might Discharge Some Debts

The other benefit is that a Chapter 13 case might discharge some of your debts. If you complete your plan successfully and still owe money on qualifying debts, the trustee handling the case might forgive those balances. In Chapter 13, your money goes to pay your priority debts first. If there is money left over, it goes to the nonpriority debts, which are debts the court might discharge.

If you feel like Chapter 13 might be the right solution for you, contact legal services like Ozment Law PA. An attorney can review your finances and help you find the right path to take.