What Are The Benefits Of Chapter 13 Bankruptcy?
Anyone who is struggling with consumer debt in Florida may be considering the possibility of filing for consumer bankruptcy. Often, consumers are a bit more familiar with Chapter 7 bankruptcy than they are with Chapter 13 bankruptcy. In a Chapter 7 bankruptcy case, all non-exempt assets are liquidated in order to repay creditors, and within a few months from the date of the initial bankruptcy filing, the debtor can have all eligible debts discharged and can start anew financially. Chapter 13 bankruptcy is quite different, however, and it is important to understand the benefits of this type of consumer bankruptcy. While it does have some benefits in common with Chapter 7 bankruptcy, many of the pros of filing for Chapter 13 bankruptcy are distinct to a reorganization bankruptcy.
Automatic Stay Will Stop Creditors or Debt Collectors
An important benefit of Chapter 13 bankruptcy is the automatic stay. This is one aspect of a Chapter 13 bankruptcy case that also exists in a Chapter 7 bankruptcy filing. Under the U.S. Bankruptcy Code, as soon as a debtor files for bankruptcy, the automatic stay attaches. The automatic stay stops creditors or debt collectors from moving forward with any action to collect debt, including filing a lawsuit or moving forward with an existing lawsuit.
You Can Prevent Foreclosure and Get Back On Track With Your Mortgage Payments
One of the most important benefits of a Chapter 13 bankruptcy case is that it can prevent foreclosure and allow you to get back on track with your mortgage payments through the repayment plan. To be clear, a Chapter 13 bankruptcy filing can stop a foreclosure from moving forward, and it can allow the debtor to keep his or her home and to catch up on mortgage payments.
How does this work? The automatic stay stops the foreclosure process from moving forward. Then, through the debtor’s repayment plan, the debtor will restructure or reorganize mortgage debt, along with other types of debt, in order to get caught up on payments owed to the mortgage servicer.
Your Non-Exempt Assets Will Not Be Liquidated
Another of the benefits of a Chapter 13 bankruptcy filing is that, different from a Chapter 7 bankruptcy case, your non-exempt assets will not be liquidated. Instead, the value of all non-exempt assets will determine the amount that you will repay over the period of three to five years as part of your repayment plan. To be clear, bankruptcy exemptions will not determine what property you are able to retain and what property will be liquidated, but instead those exemptions will help to determine the total amount of repayment over the term of the repayment plan.
Contact an Orlando Bankruptcy Lawyer
There are many benefits to filing for Chapter 13 bankruptcy. One of our experienced Orlando bankruptcy lawyers can discuss the advantages of a Chapter 13 bankruptcy filing with you along with some of the potential limitations. Do not hesitate to get in touch with our firm to learn more about how we can assist you. Contact Anderson & Ferrin today for more information.