People in New York who are considering filing for bankruptcy are frequently confused by the many different options available to them. Compounding that is the fear that a filing with follow them around for the rest of their lives and negatively affect their financial standing forever. The reality is that there are many avenues to debt relief and bankruptcy is one that is often used to get back on better financial footing. A particular option that is available in the right circumstances is Chapter 13. Understanding its benefits is key before moving forward with this strategy.
Chapter 13 accords people with the chance to protect their homes from being foreclosed upon. If there is a foreclosure in progress, it can be stopped. It is possible that delinquent payments on a mortgage can be cleared after a certain amount of time has passed. It is important to remember that the mortgage payments that are due while the Chapter 13 is in progress must be paid and paid on time. With Chapter 13, apart from the mortgage for the primary residence, secured debts can be rescheduled and extended during the Chapter 13. Payments can be reduced with this tactic.
Another benefit of Chapter 13 is that it will provide protection to a third party who might be responsible with the debtor for what are known as “consumer debts.” If, for example, there was a co-signer on a loan or for other debts, that person will not be responsible for the debts. One final advantage of Chapter 13 is that is similar to a consolidation loan and the debtor will adhere to the plan and make the required payments to a trustee. The trustee will subsequently distribute the payments to the creditors.
For those who are concerned about continuous calls from creditors about late payments or failure to pay, Chapter 13 will stop the creditors from making contact with the debtor. Of course, there are eligibility requirements that must be understood before moving forward with a Chapter 13 and there are other rules that must be followed. But for those who meet the criteria and are considering filing for bankruptcy, speaking to an experienced legal professional about the benefits of a Chapter 13 is a wise decision.
Source: uscourts.gov, “Chapter 13 — Bankruptcy Basics,” accessed on Oct. 8, 2015
