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Bankruptcy Law Blog

Wednesday, September 16, 2020

How Can Filing for Ch. 13 Bankruptcy Help Me?

People file Chapter 13 bankruptcy in Alabama for a variety of reasons. In many cases, a person files Chapter 13 because of circumstances that were not within the person’s control. For instance, a person may be injured in an accident or become ill suddenly. The injuries or illness can create financial hardships because of unpaid medical bills and loss of income.

Other reasons that a person might file bankruptcy include unemployment, divorce, business failure, losing a family member, and household income reductions. Even if a person needs to file Chapter 13 bankruptcy because the person overused credit cards, the benefits of filing Chapter 13 are available.

Benefits of Filing a Chapter 13 Bankruptcy Case

There are many benefits of filing a Chapter 13 bankruptcy case. Four reasons for filing Chapter 13 include:

Debt Relief

Debt relief is the primary reason most people file bankruptcy. In a Chapter 13 case, you can get rid of most unsecured debts for pennies on the dollar. Unsecured debts include credit cards, medical debts, personal loans, judgments, tax debts, student loans, domestic support payments, and old utility or rent payments.

You must pay some unsecured debts in full, including most tax debts, judgments related to DUIs, and domestic support payments. However, you can spread out tax debts and past-due alimony and child support over 60 months to make it affordable to repay these debts.

Student loans are generally not dischargeable in bankruptcy. However, you are not required to pay student loan payments during a Chapter 13 case, unless you choose to do so.

Stop Foreclosures and Repossessions

If you are behind on your mortgage payments or car loan payments, you can keep your home and car by filing Chapter 13. Through your Chapter 13 plan, you can catch up on your past-due mortgage payments while resuming your regular mortgage payments outside of the plan. In some cases, a person can get rid of a second mortgage in Chapter 13 if the home is worth less than is owed on the first mortgage.

Car loans may be included in a Chapter 13 plan, which can make keeping your vehicle affordable. In some cases, a person can reduce the amount owed on the car loan if the car is worth less than the balance due on the car loan.

Stop Other Debt Collection Efforts

Filing Chapter 13 stops wage garnishments, seizures, levies, and debt-collection lawsuits. The creditors must stop all actions to collect the debt as soon as you file your bankruptcy petition. The creditors must work within the bankruptcy case to resolve their debts.

Protect Property

Filing Chapter 13 can help you protect your property from being sold to repay your debts. In a Chapter 7 case, assets that have non-exempt equity can be sold by the Chapter 7 trustee to repay unsecured debts. In a Chapter 13 case, you can increase your Chapter 13 payment to keep your property.

Contact an Alabama Bankruptcy Attorney for More Information

Filing Chapter 13 helps individuals deal with debt problems to get a fresh start. Through your Chapter 13 plan, you keep your property and get rid of unsecured debts for a fraction of what you owe. You pay what you can afford to pay to get out of debt.

An Alabama bankruptcy lawyer can help you file a Chapter 13 plan with the lowest possible payment allowed by law. Talk to a lawyer now to find out how filing Chapter 13 can help you take control of your debt problems. Contact us today.


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Padgett and Robertson assist clients with Bankruptcy, Personal Bankruptcy, Consumer Bankruptcy, Chapter 7 Bankruptcy, Chapter 13 Bankruptcy and The New Bankruptcy Law in Mobile, Alabama and throughout southern Alabama. Alabama State Bar Association Regulations require the following: "No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers." 11 U.S.C. 528 of the U.S. Bankruptcy Code requires the following: "We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.”



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Alabama State Bar Association Regulations require the following: "No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers." 11 U.S.C. 528 of the U.S. Bankruptcy Code requires the following: "We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.”