Why File a Chapter 13 Bankruptcy Case?

Why File a Chapter 13 Bankruptcy Case? """There are numerous factors why filing for Chapter 13 bankruptcy may be the best option. Recently, the most prevalent reason is the mortgage crisis. Too many householders continue to have difficulty making their mortgage payments. Filing for chapter 13 bankruptcy will enable a homeowner to make up on missed mortgage payments by spreading them out over the duration of the reorganization plan. Most programs last sixty months. A further consequence of the mortgage crisis was the precipitous decline in home values. The opposite side of this unfortunate circumstance is that under certain conditions, underwater second mortgages or equity lines of credit can be eliminated by filing for chapter 13 bankruptcy. Ensure that you hire a bankruptcy attorney who has experience filing a petition to avoid underwater liens.

Another reason to reorganize your debts is to discharge taxes and pay the portion that is not dischargeable under the plan. Whether or not taxes are dischargeable depends on the passage of time. When the taxes were due, when they were assessed, and whether or not the tax return was filed on time. This article does not discuss a number of factors that determine whether taxes are dischargeable or not. When registering for Chapter 7 bankruptcy, taxes may also be discharged.

Another reason to reorganize your debts is to lower your automobile payment. Chapter 13 can reduce the amount owed on a vehicle to its current market price. Not the amount that you owe when the lawsuit is filed. The percentage rate can also be reduced by the reorganization plan. Your vehicle must have been purchased at least 910 days prior to filing for bankruptcy. Many auto loan companies will object to the plan's approval and attempt to contend that the vehicle is worth more than it actually is. Expect to hear from the auto loan company if you pay down a vehicle loan to its fair market value.

In 2005, the bankruptcy code was modified to establish the Means Test. The Means Test was created to determine whether or not a debtor has disposable income available to unsecured creditors. It employs local standards for some expenses and national standards for other expenses; it is far from perfect. This is an attempt to standardize a method for compelling high-income bankruptcy filers to repay a portion of their debt under the plan of reorganization. The Means Test has made filing for bankruptcy more complicated, and it is crucial to retain an experienced bankruptcy attorney who is familiar with what is permitted in your jurisdiction and what is not permitted by the chapter 13 trustee's office. Each chapter 13 trustee administers chapter 13 bankruptcy cases in a unique manner.

There are numerous additional reasons not mentioned in this article for filing Chapter 13 bankruptcy. It depends entirely on your income, expenditures, and assets.""

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