Chapter 13 allows individuals to work themselves out of financial difficulties with a special plan to repay their bills.
Chapter 13 Benefits:
- Your payments are carefully budgeted and are usually reduced.
- Creditors can no longer contact you or garnish your wages.
- Interest on unsecured debts stops the day your case is filed
- Repossessions and foreclosures can be stopped.
- Co-signers on consumer debts are also protected.
- Your savings and equity may be protected.
- Unwanted contracts/leases may be rejected/canceled.
Payments That Fit Within Your Budget
Under a Chapter 13 Plan, you will often find that monthly payments are reduced because the court can extend your repayment period for up to 60 months and because the payments are tailored to your available disposable income. You still make payments in an orderly way, but they are more likely to be payments you can afford.
How Chapter 13 Protects You
Chapter 13 Stops Collection Action Including Garnishments
Once you file your Chapter 13 case, creditors can no longer contact your employer or legally arrange to have your wages garnished.
Chapter 13 Stops Creditors from Calling
The same order of protection that goes into effect when you file a Chapter 13 also prevents creditors from trying to collect from you by telephone, in writing or by lawsuits against you. You’re instantly relieved from creditor harassment/collection while in a chapter 13 case.
Chapter 13 Stops Additional Interest Charges
You unsecured creditors can no longer charge you interest after you file a Chapter 13. This speeds up the debt repayment as you end up paying less.
Chapter 13 is Economical
The amount you’ll save in interest and creditors’ charges will probably be more than what you pay for your costs to file the chapter 13.
Chapter 13 Can Stop Repossession and Foreclosures
Chapter 13 allows you to keep possession of most property, including your home. In most cases, the Chapter 13 plan prevents creditors from trying to repossess your car or foreclose your home.
Chapter 13 Protects Co-Signers
If someone has co-signed on a consumer debt with you, a Chapter 13 can keep creditors from being able to make collection attempts against your co-signer due to the Co-Debtor Stay.
Chapter 13 Can Reject Invalid Claims
You have the ability to object to unsupported and untimely claims.
Chapter 13 Protects Equity and Savings
A Chapter 13 plan can help you hold onto your savings and any equity you may have in real estate, stocks, bonds and insurance policies.
Chapter 13 Allows For Rejection of Unwanted Contracts
You have the ability to Cancel/Reject unwanted contracts/leases that you do not wish to continue to retain.