Why You Shouldn't Be Afraid to File Chapter 13 Bankruptcy
Chapter 13 bankruptcy has become the dreaded type of bankruptcy that every debtor wants to avoid. It's unfortunate because Chapter 13 bankruptcy provides the type of flexibility and protection that many debtors who are fully employed need. Nevertheless, many debtors fear Chapter 13 bankruptcy and if they even suspect that they will be "forced" to file this chapter of bankruptcy, they will avoid seeing a bankruptcy attorney.
But there is nothing to fear, and below are three reasons why debtors shouldn't fear Chapter 13 bankruptcy:
- Chapter 13 bankruptcy will protect your wages from creditors. When you're working a job and fall behind on your debt payments, creditors have the power to garnish your wages. It's Chapter 13 bankruptcy that prevents them from using that power.
- Chapter 13 bankruptcy forces stubborn creditors to the negotiating table. One of the most common problems facing debtors are loans worth more than the assets which they secure. A home which has lost value or a vehicle which is worth a lot less than the loan you took out a few years back can cause troubles outside bankruptcy. However, upside down loans are often modified or "crammed down" in Chapter 13 bankruptcy allowing the debtor to pay significantly less.
- Chapter 13 bankruptcy allows the debtor to catch up on his/her debt payments. Are you several months behind on your mortgage or car payment? If you file Chapter 13 bankruptcy, those delinquent payments can be "caught up" over the course of 3 to five years. For a debtor who avoids bankruptcy, catching up payments can be next to impossible.