Bankruptcy filed under Chapter 13 presents men and women a number of benefits over liquidation under chapter 7. Perhaps most markedly, chapter 13 provides men and women a chance to help save their homes from foreclosure. By filing under this chapter, men and women can stop foreclosure proceedings and may remedy past due mortgage payments over time.
However, they will have to still make all mortgage payments that come due during the bankruptcy filed under chapter 13 plan by the due date. One more plus of chap 13 is that it allows consumers to reschedule secured debts (other than a mortgage for their primary residence) and extend them over the life of the chapter 13 plan. Doing this may lower the payments.
Chapter 13 also has a particular provision that guards third parties who are accountable to the debtor on “consumer debts.” This provision might shield co-signers. Finally, bankruptcy filed under chapter 13 acts like a consolidation loan under which the person makes the plan payments to a chapter 13 bankruptcy trustee who then distributes payments to creditors. Consumers will have no immediate contact with creditors while under chapter 13 protection.
Virtually any individual, even if self-employed or operating an unincorporated business, is suitable for bankruptcy filed under chapter 13 aid as long as the person’s unsecured debts are less than $360,475 and secured debts are less than $1,081,400. These amounts are modified regularly to mirror changes in the consumer price index. A corporation or partnership may not be a ch 13 debtor.
An individual can’t file under chapter 13 or any other chapter if, during the former 180 days, a prior bankruptcy petition was dismissed due to the debtor’s willful failure to appear before the court or comply with orders of the court or was voluntarily dismissed after creditors sought relief from the bankruptcy court to recover assets upon which they hold liens. In addition, no person may be a debtor under chap 13 or any chapter of the Bankruptcy Code unless he or she has, within 180 days previous to filing, received credit counseling from an authorized credit counseling agency either in an individual or group briefing. There are exceptions in emergency conditions or where the U.S. trustee (or bankruptcy administrator) has decided that there are inadequate authorized agencies to offer the required counseling. If a debt management plan is produced while in required credit counseling, it has to be filed with the court.
If you’re considering bankruptcy, talk to a local Boston debt law firm about your options. An experienced Boston debt law firm can provide you with which options are right for you.