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Why Chapter 13 Bankruptcy Might Be Your Best Option

Posted by Rory Vohwinkel | Jul 09, 2018 | 0 Comments

You feel the walls closing in. You're constantly getting phone calls and threatening letters from lawyers and bill collectors. Seemingly, your entire paycheck goes toward making minimum payments on your many bills. And your house is edging toward foreclosure. It's time to do something. But what?

There's nothing pleasant about the thought of a Chapter 7 or Chapter 13 Las Vegas bankruptcy (except the emotional relief that it eventually brings). In this post, we'll take a brief look at the possible advantages of a Chapter 13 filing.

First, a brief explanation. The foundation of a Chapter 13 personal bankruptcy is a debt repayment plan. That's in contrast to a Chapter 7 filing, which involves liquidating most of your assets. Now here are some of the advantages of going the Chapter 13 route.

You'll get to keep your assets. That's a big one, and one of the key reasons debtors consider Chapter 13. You have some protection of your house and car, up to a certain dollar value, in the case of Chapter 7 bankruptcy. But you could lose a second home or vehicle or even your primary resident if it's beyond a set value. Under Chapter 13, you'd have to catch up on loan payments and then maintain current payments once you're discharged from bankruptcy, but you can keep those assets—or sell them if you wish.

You'll be put on a structured repayment plan you can afford. That doesn't mean it will be easy, but you can stretch payments over as long as five years. A federal bankruptcy judge will determine how much you can afford to repay based on your income and expenses and what you owe. For some of your unsecured creditors (such as your credit cards) you might only have to repay a very small fraction of the amount owed. The judge makes the decision and your creditors can't refuse the offer or withdraw from the filing.

Bill collectors won't hound you. That's another big benefit. During the repayment period, they're legally bound to leave you alone. So you have as long as five years to financially catch your breath and focus only on that monthly or bi-weekly payment to the courts.

You can end your Chapter 13 filing mid-stream. Let's say you run into an unexpected windfall. An inheritance or you win the lottery or get a generous raise or a new, much higher-paying job or…whatever. You can voluntarily withdraw from your filing and catch up on your bill payments without the intercession of the court. That's not the case with a Chapter 7 filing, to which you're generally locked into for better or worse.

You can still seek a loan modification. Even during your Chapter 13 case your lawyer can try to negotiate with your home lender for a lower interest rate or better terms. This might help make it easier for you to pay your mortgage after your bankruptcy is discharged.

Is Chapter 13 Right For You?

There are certain areas in which a Chapter 7 filing might be preferable. Only an experienced bankruptcy Las Vegas attorney can help you decide which option works best in your unique situation. That's why your first step, and one that you should take as soon as you know you're in financial trouble, is to contact Vohwinkel & Associates today.

Call us at 702-838-7522.

You feel the walls closing in. You're constantly getting phone calls and threatening letters from lawyers and bill collectors. Seemingly, your entire paycheck goes toward making minimum payments on your many bills. And your house is edging toward foreclosure. It's time to do something. But what?

There's nothing pleasant about the thought of a Chapter 7 or Chapter 13 Las Vegas bankruptcy (except the emotional relief that it eventually brings). In this post, we'll take a brief look at the possible advantages of a Chapter 13 filing.

First, a brief explanation. The foundation of a Chapter 13 personal bankruptcy is a debt repayment plan. That's in contrast to a Chapter 7 filing, which involves liquidating most of your assets. Now here are some of the advantages of going the Chapter 13 route.

You'll get to keep your assets. That's a big one, and one of the key reasons debtors consider Chapter 13. You have some protection of your house and car, up to a certain dollar value, in the case of Chapter 7 bankruptcy. But you could lose a second home or vehicle or even your primary resident if it's beyond a set value. Under Chapter 13, you'd have to catch up on loan payments and then maintain current payments once you're discharged from bankruptcy, but you can keep those assets—or sell them if you wish.

You'll be put on a structured repayment plan you can afford. That doesn't mean it will be easy, but you can stretch payments over as long as five years. A federal bankruptcy judge will determine how much you can afford to repay based on your income and expenses and what you owe. For some of your unsecured creditors (such as your credit cards) you might only have to repay a very small fraction of the amount owed. The judge makes the decision and your creditors can't refuse the offer or withdraw from the filing.

Bill collectors won't hound you. That's another big benefit. During the repayment period, they're legally bound to leave you alone. So you have as long as five years to financially catch your breath and focus only on that monthly or bi-weekly payment to the courts.

You can end your Chapter 13 filing mid-stream. Let's say you run into an unexpected windfall. An inheritance or you win the lottery or get a generous raise or a new, much higher-paying job or…whatever. You can voluntarily withdraw from your filing and catch up on your bill payments without the intercession of the court. That's not the case with a Chapter 7 filing, to which you're generally locked into for better or worse.

You can still seek a loan modification. Even during your Chapter 13 case your lawyer can try to negotiate with your home lender for a lower interest rate or better terms. This might help make it easier for you to pay your mortgage after your bankruptcy is discharged.

Is Chapter 13 Right For You?

There are certain areas in which a Chapter 7 filing might be preferable. Only an experienced bankruptcy Las Vegas attorney can help you decide which option works best in your unique situation. That's why your first step, and one that you should take as soon as you know you're in financial trouble, is to contact Vohwinkel & Associates today.

Call us at 702-838-7522.

About the Author

Rory Vohwinkel

Rory Vohwinkel began his legal career at one of Nevada's oldest and largest law firms, representing clients in commercial litigation and business transactions. Rory went on to serve as the sole in-house attorney for a national real estate investment and property management company. In 2009, Rory...

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