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Filing Bankruptcy Under Chapter 13 and Car Loans


Different types of bankruptcy are apt for different individuals, depending on their circumstances, priorities, and the types of debt involved. No two bankruptcy cases are the same, and your would-be bankruptcy filing will depend on a variety of factors.

– Declaring bankruptcy under Chapter 13

A Chapter 13 petition for bankruptcy, for instance, allows a bankrupt individual to restructure and reorganize his or her finances. Proceeding with restructuring and filing for bankruptcy will enable you the filer to bring current most monthly payments for secured loans.

It might be helpful to know that Chapter 13 bankruptcy proceedings are generally longer than other forms of consumer bankruptcy. However, despite the long period involved, it is preferred by some for several reasons. For one, people who opt to file bankruptcy cases under this chapter can deal with debts while keeping the property. Additionally, even though your Chapter 13 bankruptcy filing will stay on credit reports for the next seven years, you will see your credit scores eventually improve in no time.

– Chapter 13 bankruptcies and your payment plan

If you are considering bankruptcy, you will need to discuss your debt reorganization plans with a credit counselor. It is also crucial to first meet with reliable Towson bankruptcy attorneys. A trusted bankruptcy attorney can help with your debt-repayment paperwork and bankruptcy forms that you will submit to your trustee.

Before you can declare bankruptcy, get someone who can explain to you how to file and how much can help with debt relief. Filing Chapter 13 involves a specific debt repayment plan, which should enable you to repay certain secured and unsecured debts. Individuals who filed for bankruptcy under reorganization are to propose a payment plan, which shall run for three or five years. After reviewing the supporting documents you submit, the bankruptcy court would approve the said plan.

– Advantages of a Chapter 13 declaration of bankruptcy

A Chapter 13 bankruptcy case will essentially give you time to pay back student loans, alimony, child support, and certain tax debt, which would likely not be wiped out by a Chapter 7 bankruptcy discharge. Additionally, most people decide to file for bankruptcy to benefit from the automatic stay. This bankruptcy protection from the federal court prevents debt-collectors from asking for payment, which can help stop creditor harassment. It can also allow you to stop foreclosure or repossession of your car, home, or other personal property.

Unlike a Chapter 7 bankruptcy proceeding, your trustee will not liquidate your assets (which would have otherwise been liquidated to pay back your lenders). However, if there is non-exempt equity on your car, your unsecured creditors must be paid an amount that is equal to that non-exempt portion. This will vary for each case, and experienced Towson bankruptcy attorneys can discuss this with you further.

– Bankruptcy Chapter 13 and car loans

As mentioned, declaring bankruptcy under Chapter 13 will enable you to save your car from repossession. Bankrupt individuals may also include the car loan with other debts that they will pay off through the repayment plan. Following the usual bankruptcy process, one could even reduce the principal balance (or even the interest rate) of the original car loan.

There are, however, instances where monthly payments are made as is. This means that your car loan will not be part of your filing and will remain the same, similar to before bankruptcy was filed. Experienced Towson bankruptcy attorneys can explain when the latter would be more ideal.

– Struggling with debt and seeking legal help

People with financial problems explore all possible debt-relief options. If you are having trouble dealing with debts, a bankruptcy case could be a window of opportunity for you. Now if you are already planning to file bankruptcy, be aware that there’s a lot that you must learn. A bankruptcy petition can indeed help with your debt problems and allow you to have a fresh start in life, but bankruptcy laws must be taken into account.

For assistance, give us a call. Contact our Towson bankruptcy attorneys at The Grafton Firm for a consultation.

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