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At the most basic level, Chapter 13 bankruptcy in Raleigh involves a payment plan that you will undertake for three to five years, depending on your situation. Some people get discouraged due to the length of the plan, and this can make Chapter 7 a more appealing alternative.
However, many unique advantages to filing for Chapter 13 are not included in Chapter 7. When it comes to your financial well-being for the long term, Chapter 13 bankruptcy can be one of the best solutions possible.
It allows you to pay only what you can afford.
Under Chapter 13 bankruptcy, you will be paying a single monthly payment to a bankruptcy trustee. This monthly payment will cover all your debt.
Your budget will determine this amount. This budget combines IRS standards, your monthly expenses, and the standards of the Chapter 13 bankruptcy trustee, put together with help from our bankruptcy lawyers in Raleigh, NC as approved by the state’s Bankruptcy Court. Also called your discretionary income, this combination of expenses will be subtracted from your income.
The good news is that our bankruptcy attorneys can guide you toward a payment plan that may defer payment or reorganize bigger loan payments in cases like job loss, which will result to lack of discretionary income that is more than your expenses.
This way, your debt becomes much more manageable as you start getting your finances in control.
Your debt can eventually be discharged.
Because you only pay what you can, it’s possible that you won’t even have to pay the full amount of your debt after those three to five years.
In this way, Chapter 13 becomes similar to Chapter 7— it completely wipes out your dischargeable debt for a whole new beginning.
Thanks to Chapter 13 bankruptcy, your dischargeable debt won’t accrue additional interest. That’s a lot of potential savings as opposed to your original debt situation, and you can look forward to being totally debt-free once your payment plan is over.
You can keep your home.
Do you have past due debt on your mortgage? Under Chapter 13, you can start catching up on your payments (also called arrearages) within your repayment plan. You can take advantage of this benefit if you file for bankruptcy before the date of foreclosure sale.
There are some caveats to this rule, though, such as having to pay your mortgage payments faithfully each month so you can keep your home. Our bankruptcy lawyers in Raleigh, NC will be glad to explain this in more detail during your consultation.
You can be free of higher or second mortgages.
Another powerful element of filing for Chapter 13 is lien stripping. This solution is designed to remove higher or second mortgages so you only have to pay for your first one.
There are several rules to qualify for a lien stripping. For instance, the value of your home should be less than or equal to what you need to pay for your first mortgage on the day you file your case. This takes careful calculation, and you need an experienced bankruptcy attorney in Raleigh to increase your chances of being approved for a lien strip.
Apart from these, there are many more advantages to filing for Chapter 13 bankruptcy. If you’re leaning toward this option, speaking to our bankruptcy attorneys as soon as you can will help you get started with the process. Call Weik Law Office at 919-845-7877 today to schedule a free consultation with one of our attorneys.