Many individuals report that filing bankruptcy was the best choice they ever made. The Bankruptcy Code provides incredible relief for those struggling with and buried in debt. Let's look at the top five provisions in the Bankruptcy Code
Number 5: Redemption/Cram-Down of a Vehicle
A chapter 7 filer may "redeem" a personal vehicle by paying the fair market value of the vehicle to the creditor, and discharge the remaining vehicle debt. While the redemption process requires a lump sum payment, there are several companies that offer redemption loans with competitive interest rates. Additionally,
chapter 13 filers may "cram down" a vehicle loan to the value of the vehicle. The crammed-down debt is then paid off during the chapter 13 repayment period. While there are restrictions for both the chapter 7 redemption and chapter 13 cram-down processes, many debtors are able to take advantage of these powerful provisions and save thousands of dollars.
Number 4: Automatic Stay / Co-Debtor Stay
The automatic stay is one of the most powerful and far-reaching provisions in the American legal system. The filing of a bankruptcy case triggers this federal legal protection that automatically stops all legal processes and collection actions. State and federal lawsuits must stop, garnishments must stop, repossessions, foreclosures, harassing telephone calls and collection letters must stop. The stay is an opportunity for the bankruptcy filer to reorganize finances without the pressures of creditor collections. Non-filing co-debtors are also protected during a chapter 13 bankruptcy which may last up to five years.
Number 3: Chapter 13 (or 11) Repayment Plan
A chapter 13 repayment plan provides time to pay creditors over three to five years. Most chapter 13 filers pay little or nothing to unsecured creditors (e.g. credit cards or medical bills), while paying off mortgage arrears, vehicle payments, taxes, and other secured or nondischargeable debts. The Chapter 13 repayment plan is way to restructure your finances under the supervision and protection of the federal bankruptcy court. I cannot say enough about the great things chapter 13 can accomplish in a relatively short period of time.
Number 2: Lien Stripping a Second Mortgage
Lien stripping a junior mortgage during chapter 13 bankruptcy has become a very popular option for underwater homeowners. Lien stripping is allowed when the value of the home is less than the amount of the senior (first) mortgage. For instance, if your home is worth $200,000 and the balance of your first mortgage is $210,000, any junior mortgage may be stripped off in chapter 13 bankruptcy. The stripped off debt will be considered unsecured and receive the same treatment as your other unsecured creditors.
Number 1: Bankruptcy Discharge
The bankruptcy discharge is a federal court order prohibiting the collection of pre-bankruptcy debts. Discharged debts are no longer legally enforceable against the debtor. The bankruptcy discharge is the foundation of bankruptcy's "fresh start." The discharged debtor/filer can begin the rebuilding process free from the pressures of overwhelming debt. The bankruptcy discharge is permanent and never expires.
Bankruptcy offers many powerful protections tools to reshape your finances. Get the facts today from an experienced attorney and learn how bankruptcy can help your family build a better financial future.
Contact the experienced Chicago bankruptcy attorneys at Glanzer & Associates, P.C. at 1-312-644-2227 to discuss your specific situation, and to schedule your free, in-person consultation.