Chapter 13 bankruptcy is available to consumer debtors who may not be able to file a chapter 7 bankruptcy or for whom a chapter 7 bankruptcy may not be the best bankruptcy option. In a chapter 13 bankruptcy, debtors pay a monthly payment to a “trustee” (someone appointed by the court to collect payments from people who file bankruptcy). The trustee then uses the money received from the payments to straighten out the finances of the debtor. In many chapter 13 cases, payments made to the bankruptcy trustee are used to catch up on back mortgage payments or to pay for cars that may not be worth as much as what is owed on the cars.
- Chapter 13 stops foreclosure immediately
- Mortgage companies must cooperate after filing
- Back mortgage payments can be caught up through payments to the trustee
- Mortgages companies are often more willing to modify mortgages after filing
- Chapter 13 stops repossession
- Automobile can be paid through payments to the trustee
- Loan balances can be reduced to market value of older vehicles
- High interest rates can be lowered making car payments affordable
- Keep tax refunds
- Discharge old tax debt
Chapter 13 is available to Virginia Beach residents with regular income who owe unsecured debts of less than $394,725 (unsecured debts are debts like credit cards and medical bills, debts that are owed to creditors who do not have liens on any collateral) and secured debts of less than $1,184,200 (secured debts are debts like mortgages and car payments where a creditor has a valid lien on your property). By choosing chapter 13, debtors in Virginia Beach may avoid losing property that they are not able to protect in a chapter 7 because of Virginia’s complicated exemption laws. They may also be able to stop mortgage foreclosures, reinstate defaulted home mortgages and obtain a broader discharge of debts than is available in a chapter 7 bankruptcy. Ordinarily, payments to unsecured creditors will be made by the chapter 13 trustee according to the plan drafted and filed for you by our bankruptcy lawyers and approved by the bankruptcy judge.
In most cases, chapter 13 bankruptcy is considered to be more favorable to those debtors who are concerned about their future credit rating. chapter 13 is often seen as an effort to repay a portion of the debt you owe instead of wiping everything out in a chapter 7. chapter 13 payments made to the trustee can also be considered by many creditors to be a consistent payment history necessary to rebuild credit after bankruptcy. In general, a chapter 7 bankruptcy will stay on your credit report for up to 10 years but a chapter 13 bankruptcy usually comes off sooner than that.