People see filing for bankruptcy protection as a last resort but going through the process delivers several benefits for individuals and married couples who could lose nearly everything if they fail to get their debts under control.
Some Chapter 13 bankruptcy attorneys in Ohio, want everyone to understand that declaring for bankruptcy does not automatically eliminate debt. Sometimes, as with student loans and past-due child support, no form of bankruptcy even reduces the amount owed. Last, receiving protection under any part of the federal bankruptcy code requires completing a legal process that can take several months. Read Common Chapter 13 Bankruptcy Questions and Answers.
People who file for bankruptcy under Chapter 13 must have a plan for dealing with creditors, make decisions on what they can afford to keep (multiple cars and home), and commit to making payments to the court for a period of three to five years. Working closely with an experienced and understanding bankruptcy lawyer will help a person in need of a financial restart put together the plan, negotiate with creditors, and prepare for court hearings.
Doing that can produce the following benefits of declaring Chapter 13 Bankruptcy in Ohio:
- Foreclosure and collection actions stop. When a federal court accepts a Chapter 13 bankruptcy petition, all creditors must stop sending collection notices, suspend lawsuits, and halt repossession and foreclosure proceedings.
- Payments on debts get extended and/or reduced. Unsecured debt like credit cards and medical bills will be paid pennies on the dollar in a Chapter 13. Car loans can be paid at a lower interest rate and sometimes can have the balance lowered to the value of the vehicle. Loan terms can be extended. Monthly payment amounts can be reduced, and fees can be waived.
- Possessions are sold or surrendered by agreement rather than repossession. As long as mutually agreeable terms are reached on how to continue making payments on loans and credit accounts, our chapter 13 clients can keep their home, car, and other items they are financing.
- Credit can be reestablished during the bankruptcy. A Chapter 13 bankruptcy comes off the credit report after 7 years. However, most Chapter 13 cases last 5 years and your credit slowly rises throughout the bankruptcy. Once the plan is completed, the filing will be off of your credit report in two years.
- Repayment can be simplified. A Chapter 13 bankruptcy plan allows the client to make a single monthly payment to the court. The court then distributes the funds to remaining creditors based on the agreements negotiated.
- Chapter 13 protection remains an option for new, unforeseen financial crises. Federal bankruptcy law permits individuals and couples to file for Chapter 7 protection only once every eight years. No such restriction exists for Chapter 13 protection.
You can learn more about the pros and cons of Chapter 13 bankruptcy protection by scheduling a consultation with a bankruptcy attorney.