Benefits of Filing Chapter 13 Bankruptcy

Overwhelmed by debt but aren’t quite sure what to do about it? Chapter 13 bankruptcy may be worth a look. Learn about the advantages of filing for bankruptcy under Chapter 13.

Imagine this: You owe a large sum of money to creditors but aren’t making enough money to make the monthly payments. This can be a stressful time for you and your family. However, no matter how bleak your financial future may seem, you may have options to improve your financial situation.

And one of those options may be filing for Chapter 13 bankruptcy. You may be wondering: “But how can I benefit from filing for bankruptcy under Chapter 13?” and “Is bankruptcy even right for me?”

If you find yourself weighed down by debt and creditors, you might want to discuss your debt relief options with an attorney. At Gilchrist Law Firm, P.C., we offer a free consultation that will let us evaluate your case and determine which legal option is right for you.

Considering filing for Chapter 13 bankruptcy? Call 505-999-1962 or fill out our contact us form to schedule a free initial consultation and discuss your situation.

What Is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy is a form of bankruptcy that allows debtors to restructure their debt to be more manageable based on their financial situation. Under this chapter, you can propose a repayment plan to repay your creditors either in part or in full over a period of three to five years.

“So, Chapter 13 bankruptcy won’t discharge my debt?” Well, it’s not that simple. If you file for bankruptcy under Chapter 13, you may be entitled to a discharge of some qualifying debts upon completion of your repayment plan.

Unlike other forms of bankruptcy, Chapter 13 bankruptcy lets you hold onto most — if not all — of your property. And that’s the most significant benefit as losing your assets, such as your car, is never a pleasant experience.

Who Qualifies for Chapter 13 Bankruptcy?

While there are many reasons to consider a Chapter 13 bankruptcy, not every debtor qualifies for relief under this chapter.

To qualify for Chapter 13 bankruptcy, you must:

1. Possess sufficient disposable income to satisfy the terms of your Chapter 13 bankruptcy repayment plan;
2. Have less than $1,395,875 in secured debts and $465,275 in unsecured debts;
3. Have filed all required tax returns for tax periods ending four years before your bankruptcy filing; and
4. Agree to go through credit counseling administered by a provider who has been approved by the U.S. Department of Justice.

If you satisfy these requirements, you may qualify for Chapter 13 bankruptcy. If you aren’t sure that you qualify, discuss your situation with a bankruptcy attorney at Gilchrist Law Firm, P.C.

What Are the Benefits of Filing Chapter 13 Bankruptcy?

Chapter 13 bankruptcy offers many advantages. Some of the most notable benefits include:

1. More time to pay off your debts: If you are facing a lot of credit card debt, you might have more time to take care of this debt. And you can do so without incurring further penalties.
2. Protection from creditors: Creditors are unable to file a lawsuit against you in order to obtain what you owe. If your creditors want to take you to collections, they will be unable to do so due to “automatic stay” triggered by your bankruptcy filing.
3. More flexibility when it comes to paying your debts: Generally, the timeline for repayment under Chapter 13 is longer and the money you pay regularly is lower than it might normally be.
4. Less damage to credit score: Chapter 13 bankruptcy is less damaging than frequent missed payments and defaults. These can greatly damage your credit.
5. You can file for Chapter 13 bankruptcy again: You only need to wait two years after your prior filing. Unlike other forms of bankruptcy, Chapter 13 bankruptcy is slightly more flexible and accessible.
6. Keep your property: You will be able to keep the property you are making payments on. This means that if you own something, you can hold onto it as you pay it off, even if you are behind on the debt.
7. Debt discharge: The court can — and, assuming you satisfy the terms of your repayment plan, will — relieve you of some of your debts. This can include credit card debt and property debt, among a wide variety of other debts.

Here are examples of these benefits in action:

1. If you owe money on a car, and this debt must be paid off by December of 2024, but you are unable to pay off the debt by that date, then Chapter 13 bankruptcy can extend that due date.
2. If you owe money on a house, and your creditors want to take you to collections, they cannot do so after you file for bankruptcy. This means your assets will be protected from creditors and their actions.
3. If you are making payments of $500 a month, these might turn into $250 payments. Or, depending on your repayment plan, they may be considerably smaller. This makes it easier to pay your debts.
4. If you hurt your credit score due to defaulting on debt, getting new credit or even renting an apartment could become more challenging. A Chapter 13 bankruptcy, while serious, is rarely as damaging.
5. If you find yourself in a precarious financial situation again, you may be able to file for Chapter 13 bankruptcy just two years after you filed for it the first time.
6. If you own a car and are still paying off this car, you can keep the car while repaying the debt. This means that it won’t be taken away, allowing your life to stay relatively close to the way it currently is.
7. If you owe a large amount of money to creditors, the court may relieve some of your debt after the completion of your Chapter 13 repayment plan. When this happens, you will no longer be forced to pay the discharged debt. You will still need to pay the rest of it, though.

Depending on your situation, Chapter 13 bankruptcy may be the solution you’re looking for to get back on your feet financially.

Discuss Your Situation With a Chapter 13 Bankruptcy Attorney

Now that you know the benefits of filing Chapter 13 bankruptcy, it may be much easier to determine if filing under this chapter is right for your situation. However, it’s likely that you still have questions or need guidance to get started. And that’s where we — here at Gilchrist Law Firm, P.C. — can help.

Our trusted, experienced bankruptcy attorney in Albuquerque, New Mexico, can help you make an informed decision about filing for bankruptcy and will guide you through the process from start to finish.

To learn more about Chapter 13 bankruptcy, and whether it’s right for you, contact our firm by calling 505-999-1962 or filling out our contact form. We offer free initial consultations.