Benefits to Use Chapter 13 Bankruptcy As an alternative to Chapter 7 Bankruptcy
Assuming you have determined that you have to file bankruptcy, some people probably are not mindful of the numerous options offered. Chapter 13 Bankruptcy and Chapter 7 Bankruptcy are the kinds of bankruptcy chosen most frequently by individuals. You can find several similarities, but also many differences between these forms of bankruptcy. These are a lot of recommendations to help you decide which type of bankruptcy to file. Always remember that this really can’t replace the recommendation of a Los Angeles bankruptcy attorney. Chapter 13 is very often selected due to the fact a consumer can’t meet the criteria for chapter 7, but one can find some people invaluable amazing benefits for people in special situations including those with a second mortgage, repossession, or foreclosure.
A chapter 7 bankruptcy is known as a liquidation proceeding that permits a borrower to wipe out most of his or her unsecured debt. In this system, the bankruptcy trustee may liquidate most of the debtor’s nonexempt assets to pay these creditors. Exempt assets is basically all of the debtors property under $23,000. You will find other exemptions available that a Los Angeles bankruptcy attorney can help you utilize in order to maximize the amount of property you can keep. The chapter 7 has nominal impact on secured property other than the automatic stay which would prevent any attempts to collect from the borrower including repossessions and foreclosures.
A chapter 13 bankruptcy utilizes an individual’s excess income to develop a payment plan to repay a person’s creditors over 3 to 5 years. This excess income is established by utilizing the debtor’s income minus expenses paid by the consumer. Expenses, for calculation purposes, never include amounts paid to creditors due to the fact they are debts, not expense (with the exception of for secured debts, such as a mortgage or car loan). Nonexempt assets can increase an individual’s repayment amount above this excess income.
Chapter 13 bankruptcy is valuable for people who would like to remove a 2nd mortgage. When the loan amount of the first mortgage exceeds the market value of the home, the 2nd mortgage can be removed. Since the 1st mortgage exceeds the market value of the home, there is essentially no collateral backing the 2nd mortgage. In a chapter 13 lien strip the 2nd mortgage is changed from a secured debt into an unsecured debt and the 1st mortgage is reduced to the fair market value of the home. In a chapter 13, only secured debts, and certain other debts, need to be paid completely before a discharge is attained, as a result unsecured creditors can receive either nothing or hardly anything.
While in a foreclosure, a chapter 13 bankruptcy can be useful. While a chapter 7 will trigger an automatic stay which inturn halts a foreclosure sale, you may still have to pay just about all of your arrearages immediately or the lender can be able to take an individual’s home at the end of the stay. A chapter 13, on the other hand, will allow you to put the back payments in a person’s payment plan and you may be able to keep your home.
Chapter 13 can also help where a motor vehicle, or other collateral is about to be repossessed. While the automatic stay in chapter 7 bankruptcy can prevent the repossession temporarily, it is frequently unhelpful due to the fact the person must immediately pay off the arrearages on the loan. In contrast, a debtor filing a chapter 13 bankruptcy can keep the car, and the missed payments become a part of the payment plan which usually the consumer pays in addition to his regular car monthly payment.
Chapter 13 is also important where there has already been a repossession. Filing a chapter 13 causes the lender to return the motor vehicle to the debtor with the back payments becoming part of the payment plan and the regular car monthly payment remains a separate bill. A Chapter 7 bankruptcy has no impact and the only way to retrieve the car, outside of chapter 13 it is to repay off the entire balance of the car.
Choosing between chapter 13 bankruptcy and chapter 7 bankruptcy can be very difficult. A Los Angeles bankruptcy attorney can look at an individual’s financial situation and provide you with the information you might need so that you can make the right conclusion. Feel free to contact the Law Offices of Alon Darvish to learn more about your bankruptcy options. You may reach Mr.Darvish personally at (800)921-6513 or visit his websit at www.BankruptcyLALaw.com
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Los Angeles Bankruptcy Attorney Alon Darvish provides Chapter 7 and Chapter 13 bankruptcy assistance to consumers with credit card debt, foreclosures, lawsuits, bank levys, and wage garnishments