Top 5 Reasons to File Chapter 13 in Sacramento

Chapter 13 bankruptcy is a powerful option for many people that need a fresh start with their finances. Here are the Top 5 Reasons to File Chapter 13 in Sacramento.

1. Wipe Out a 2nd Mortgage

Secured loans such as mortgages aren’t affected by Chapter 7 bankruptcy. But did you know that you can wipe out a second mortgage in a Chapter 13? In certain circumstances where your house is underwater, you can “strip” a second mortgage right off your house and discharge the debt in Chapter 13. In many cases this can mean substantial savings, even when compared with Chapter 7.

2. Catch Up on Mortgage / Car Loan Arrears

Chapter 7 bankruptcy won’t help you if you have missed many payments on your mortgage or car loan. If you need help catching up on your mortgage or another secured debt like a car loan, Chapter 13 will buy you some time. You will make monthly payments towards your arrears, and during the time that you are in bankruptcy your creditors won’t be able to try to foreclose or repossess your property.

3. Pay off non-dischargeable debts over time without interest

Some types of debts are not dischargeable in bankruptcy, such as some taxes, past-due child support, and certain types of personal injury judgements. If you are facing imminent collection activity on a non-dischargeable debt, Chapter 7 bankruptcy won’t give you much relief. But Chapter 13 will give you time to pay these debts off — without interest or penalties accruing. Just imagine paying off the IRS on your terms, not theirs. Chapter 13 can make this possible.

4. Your Income is Too High for Chapter 7

Not everybody qualifies for Chapter 7 income. Certain high-income earners will not be able to pass the “means test” to be able to get into Chapter 7 court. If this is the case for you, and you still need assistance with your debts, Chapter 13 is your best option. You will be given five years to repay at least a portion of your debts. In many cases you do not have to repay all of your debts during Chapter 13. Whatever is not paid off will be discharged by the court at the end of your case, just like in Chapter 7.

5. You Received a Recent Chapter 7 Discharge

Nobody wants to declare bankruptcy more than once, but unfortunately sometimes it is a necessity. Under current bankruptcy law, you can only get into Chapter 7 once every eight years. If you run into financial trouble before the eight years has passed, you can always file a Chapter 13 to regain control over your finances.

Please contact my office at (916) 333-2222 to discuss the many benefits of Chapter 13 bankruptcy in Sacramento.

Attorney Rick Morin