If you have defaulted on debts, then creditors may have a range of options they can use to recoup their losses. Many of these options could target your most important assets. For example, creditors may seek a judgment to garnish a percentage of your wages. In other cases, a creditor may foreclose on your home or seize your vehicle. Filing for Chapter 13 bankruptcy is one possible way to protect your assets from creditors. Chapter 13 bankruptcy can:
- Prevent collection attempts. After you file for bankruptcy, an automatic stay is issued that will temporarily halt collection attempts. This means creditors cannot foreclose on your home, seize your vehicle or garnish your wages unless they successfully lift the stay.
- Set up a repayment plan. Chapter 13 bankruptcy reorganizes all your debts into one payment plan that lasts for three to five years. In many cases, you may pay pennies on the dollar for what you originally owed. After completing the Chapter 13 repayment plan, unsecured debts may be discharged and you may keep your home or vehicle.
Chapter 13 bankruptcy is a good option if you have nonexempt, secured assets that you want to protect. However, it cannot be stressed enough that you must complete your three to five-year repayment plan to reap the benefits of a Chapter 13 bankruptcy. If you fail to complete this repayment plan, then creditors may seize these properties.
Are There Other Benefits to Filing for Chapter 13 Bankruptcy?
There are other benefits to filing for Chapter 13 bankruptcy that can improve your long-term financial situation. For example, most retirement plans are exempt from the bankruptcy estate. In most cases, you can keep all or some of your retirement savings. You may also be able to reduce what you owe on your vehicle or strip secondary mortgages.
Unfortunately, not everyone will qualify for a Chapter 13 bankruptcy. By speaking with a Lewisville bankruptcy attorney, you can discover whether you are eligible for this option.