Comparing the Benefits Chapter 13 bankruptcy in Georgia

If your debt is mounting and you are finding it difficult to keep up with your payments, you may consider filing for Chapter 13 bankruptcy.  Thousands of people in Georgia who have sought Chapter 13 bankruptcy protection have discovered the many benefits of debt reorganization.

Why do people choose Chapter 13?

Chapter 13 allows you to keep your assets by making payments on your debts in accordance with a court-prescribed payment plan.  In many instances, you can negotiate with your creditor to pay less than the entire balance you owe on your account.  Another reason people file under the Chapter 13 is the extended repayment plan — you can stretch your payments over the length of your bankruptcy, from a minimum of three years and up to five years. With a lower and affordable payment amount for a specific period of time, you can regain control over your finances with a reduced amount of stress.  Those who benefit most from Chapter 13 bankruptcy are people who have a significant amount of secured debt or non-exempt property that they want to protect.

Treatment of secured debt under Chapter 13

If you are making payments on property, most likely the creditor has taken a security interest, meaning if you default on your payments, the creditor may repossess the property.  Secured debts are treated differently under Chapter 13 than Chapter 7. Unlike Chapter 7, the trustee in Chapter 13 does not pay off your creditors by liquidating your property.  Instead, you pay your creditors through a repayment plan and keep the property.

There are four ways Chapter 13 deals with a secured creditor:

1. The creditor can agree to the payments in your plan.
2. The creditor can retain the lien on the property and require you to pay the entire amount of your debt through the plan.
3. You may surrender the property being held as collateral.
4. You may make arrangements with the creditor outside the plan. 

Qualifications for Chapter 13

Chapter 13 filers must show that they have regular monthly income ― via regular employment, self-employment, social security, or a pension ― and have a sufficient amount of disposable income to make payments on your debts.  The Bankruptcy Rules do not allow you to file for Chapter 13 if you have over $360,475 in unsecured debts or more than $1,081,400 in secured debts.

You can learn more about the benefits by consulting Atlanta Chapter 13 bankruptcy attorneys. For some people, reorganizing their debt through Chapter 13 is the best step toward financial freedom.   Contact DebtStoppers, Bankruptcy Law Firm Robert J. Semrad & Assoc., LLC. for a free consultation.