How Chapter 13 Can Make You Debt-Free in Three to Five Years

When people think of bankruptcy, they often think of the worst thing that could happen to them- losing their home, cars and other assets that they have. The truth is that most people who file bankruptcy lose nothing and keep everything.
Not all bankruptcies are the same. For individuals, it is usually either a Chapter 7 or Chapter 13. In Chapter 7, assets may be taken and sold but only if they are considered non-exempt by law. Most people don’t have much (usually a home, a car, a retirement plan and a few personal items) and more often than not, the exemptions allowed by law are sufficient to protect everything
Chapter 13, on the other hand, eliminates any risks that you may be worried about because your assets are not sold to pay creditors. Instead, you propose a three- to five-year plan to pay your debts based on what you can afford every month. And since not all debts have to be necessarily paid 100 percent unless you have the capacity to do so, in most cases your unsecured debts can be cut in half, if not more. The interest rate on your credit cards and most debts is also reduced to zero, thereby saving you thousands of dollars that you would have otherwise paid the credit card companies at the outrageous 17 to 29 percent rate that they’re charging you.
In Chapter 13, you can combine all kinds of debts into one low monthly payment: credit cards, taxes, student loans, medical bills, personal loans, payday loans, etc. If you owe back mortgage payments or property taxes, those can be included as well, allowing you to protect your property from foreclosure.
If you are employed or have a source of income, Chapter 13 may help you not only significantly reduce what you owe but it can also give you the relief you need from financial stress, creditor calls and other collection actions. You owe it to yourself to at least find out about it so you can decide for yourself if it is best for your situation.
Ray J. Bulaon is a bankruptcy and debt relief attorney in Valencia who has helped more than 6,000 clients get out of debt. Call his office at 866-477-7772 or 661-775-4880 for additional information.