Top 4 Reasons to Consider Chapter 13

Why would anyone want to file a Chapter 13 bankruptcy? When you are struggling to make ends meet it may seem odd that filing a bankruptcy that requires making payments to your creditors can be a better deal than Chapter 7. It often isn’t, but here are three situations where filing Chapter 13 can save you a lot of money and aggravation:
1. Chapter 13 can save your house from foreclosure. Once you fall behind on payments it is tough to get back on top of things. When you are facing foreclosure a Chapter 13 will stop your house from being sold out from under you. Chapter 13 gives you a chance to get caught up on payments. These catch up payments can be stretched out over a five year period.
2. Get rid of a second mortgage. Chapter 7 will discharge a second mortgage. That does not do you much good when you want to keep the house. The second mortgage lien survives the Chapter 7 discharge. Chapter 13 is often a better deal. The rules are different in Chapter 13. When your house is worth less than the first mortgage, Chapter 13 allows you to discharge the second mortgage and have the second mortgage lien removed.
3. Save your car. In this town a car is a necessity for most of us. When you are behind on payments you are in danger of having the car repossessed. Chapter 7 might slow down repossession, but it won’t stop it unless you can get caught up on payments fast. Chapter 13 will allow you to keep the car and pay it off in a payment plan that can last as long as five years. Many times we are able to reduce the amount owed and have a lower interest rate set.
4. Force the IRS into a payment plan. It is hard to imagine a worse creditor than the IRS. Even if you are able to work out a payment plan with the IRS they will continue to add penalties and interest to the amount owed. Chapter 13 will allow you to pay back taxes and stop additional penalties and interest from being added.
Even when you meet the rules for filing a Chapter 7 bankruptcy there may be good reasons to consider a Chapter 13 instead. Chapter 13 will often save you money and the loss of valuable property. To learn more, give us a call at 480-820-0800 and talk to an experienced Arizona bankruptcy lawyer.
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