As a board certified consumer bankruptcy attorney practicing in the Cincinnati and Dayton Ohio area, I counsel dozens of people each week on ways to resolve difficult debt situations. Many of these folks think that Chapter 7 is somehow better than Chapter 13. I tell them that even if a person qualifies for either chapter, there are several advantages to Chapter 13 that can make it a better choice than Chapter 7.
In a Chapter 7, there are limits on the value of property that you can keep without having to pay the trustee to keep it. An automobile that you worked so hard to pay off could be lost to a bankruptcy trustee in Chapter 7, when in Chapter 13, you may only have to pay small amount, if any, to avoid losing the car. In addition, in Chapter 13, you get up to five years to pay that amount.
Getting Good Bankruptcy Lawyer, Massachusetts Bankruptcy Lawyer, Bankruptcy Code,
Chapter 13 allows you to "cram down," or pay only the value of an item, leaving the amount of the debt that is owed in excess of the value of the property to be paid as an unsecured debt, often at only a few pennies on the dollar. You should be aware that the cram down is not available, under the new bankruptcy law, for cars purchased for personal use within 910 days before the filing of the bankruptcy case, or for other property purchased within one year before the bankruptcy is filed. In Chapter 7, there is no cram down. Either you pay the full contract amount due, or you lose the property. The only other option in Chapter 7 is the redemption, where you would pay the creditor the full amount of the value of the property, in lump sum. This, obviously, is not an option for most situations.
Interest rates change in Chapter 13. Currently, interest is paid on secured debts in Chapter 13 is about 8%. This is true regardless of the contract rate of interest. Not so in Chapter 7, where you have to pay the contract rate if you keep the property. Most of the time this benefits the debtor, who often has a high interest rate on cars or other secured debt. Occasionally this works to the benefit of the creditor, however. If a debtor has a 0% interest rate, it goes up to 8%. Note that this does not apply to residential real estate loans, which are excluded from modification in Chapter 13.
Finally, Chapter 13 cases can be dismissed and re-filed. This can really be a lifesaver. Often I see people who filed Chapter 7 and shortly thereafter have a significant life event that is a financial disaster, a car wreck with no insurance, a major medical problem with no health insurance, or loss of job. If they had filed a Chapter 13, they could have dismissed the case, and later refilled. Once a Chapter 7 is filed, however, a person is not eligible for another bankruptcy discharge for 8 years for Chapter 7, and 4 years for Chapter 13.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
Rating of Bankruptcy Statistics
Get Online Application at online Bankruptcy Lawyer.
0 comments:
Post a Comment