What are the advantages of filing Chapter 13 Bankruptcy?

Chapter 13 offers debtors many advantages including:
 
  • Lower your interest rate and/or your payment on vehicle loans, furniture loans and other secured debts.  The law does not currently allow for the modification of mortgages on your primary residence.
  • Protect someone who co-signed with you on a consumer loan (That person is call a co-debtor in bankruptcy.)  That protection is extended to your co-debtor as long as you propose to pay the debt in full through your case.
  • Pay your attorney fee over time, through your payments to the Chapter 13 trustee (with the exception of $250-500 required to file in order to pay certain necessary costs and fees.)
  • You can generally keep all property and not worry about losing anything.  If there is equity beyond what you can claim as exempt, you may have to pay that value to the Chapter 13 trustee for payment to creditors.
  • Unsecured creditors (like credit cards or personal loans without any collateral) do not get paid interest, so the amount owed it set on the day of filing.  No more late fees, over limit fees or other outlandish charges that can substantially increase your balance.
  • If you are behind on your mortgage, that amount (called a pre-petition arrearage) can be paid through your payments to the Chapter 13 trustee.  The regular monthly payments after filing must be made directly to the mortgage company.  Meet the requirements and you do not have to worry about foreclosure.
  • Filing a Chapter 13 case will stop your creditors from harassing you. No more worrying about the phone ringing and it  STOPS all lawsuits and garnishments.