When debts become overwhelming, there are many people who prefer to declare bankruptcy. The type of bankruptcy will depend on the needs of the individual and their income. For example, people with little income remaining when the month ends and less assets choose chapter 7. This option wipes out qualifying debt within 4 to 6 months without needing to pay creditors. When considering chapter 13 Monterey residents need to know what it entails.
Those who earn significant income and seek to protect their valuable property will need to consider chapter 13. For getting offered the debt relief, a filer will pay their discretionary income to the creditors. That usually happens in 3 to 5 years. There are various reasons to consider chapter 13. One of the major advantages is that it prevents foreclosure, which means the home will not be foreclosed.
Under normal circumstances, banks demand that borrowers pay back the full mortgage arrears. For families or individuals who are struggling financially, they will find that option not being possible and they could end up losing their home. Chapter 13 debtors are able to dictate terms of repayment. Amounts that are past-due are broken down into small chunks that are manageable and which are paid back over the life of the chapter 13 plan.
When one chooses this option, it will help in mortgage modification. It will not just be possible to dictate to a lender the terms under which to pay past-due payments but it will also be possible to have the mortgage modified. As a rule, first mortgage should not be modified but it is possible to modify the second and third. The modification is done through a process called lien stripping. After a mortgage gets stripped, the loan will be paid by the debtor.
The advantage of this option over chapter 7 is as regards credit report of the individual. Chapter 13 bankruptcy will be shown on the credit report for just 7 years while for chapter 7 it will be there for 10 years. What that means is that creditors will know you did file for bankruptcy in the case of chapter 7, with the impact being more serious.
There are some requirements before one is deemed to qualify. One thing to understand first is that there are limits of debt that one can have. The unsecured and secured debts are not supposed to get past some amount. In case the debts are too much, one will not qualify. The other requirement is that you are supposed to prove that you have a steady income. Having a steady income means you need to afford your monthly expenses and still be able to make repayments.
This option is never available for companies. That means that only individuals are eligible. Nevertheless, business-related debts which one is personally responsible for can be part of the plan. That means that a sole proprietorship will be able to benefit.
When the repayment is completed, you should be able to show the court that you can afford all your monthly obligations. The counseling should also be complete. It is only then that the process can start to be finalized.
Those who earn significant income and seek to protect their valuable property will need to consider chapter 13. For getting offered the debt relief, a filer will pay their discretionary income to the creditors. That usually happens in 3 to 5 years. There are various reasons to consider chapter 13. One of the major advantages is that it prevents foreclosure, which means the home will not be foreclosed.
Under normal circumstances, banks demand that borrowers pay back the full mortgage arrears. For families or individuals who are struggling financially, they will find that option not being possible and they could end up losing their home. Chapter 13 debtors are able to dictate terms of repayment. Amounts that are past-due are broken down into small chunks that are manageable and which are paid back over the life of the chapter 13 plan.
When one chooses this option, it will help in mortgage modification. It will not just be possible to dictate to a lender the terms under which to pay past-due payments but it will also be possible to have the mortgage modified. As a rule, first mortgage should not be modified but it is possible to modify the second and third. The modification is done through a process called lien stripping. After a mortgage gets stripped, the loan will be paid by the debtor.
The advantage of this option over chapter 7 is as regards credit report of the individual. Chapter 13 bankruptcy will be shown on the credit report for just 7 years while for chapter 7 it will be there for 10 years. What that means is that creditors will know you did file for bankruptcy in the case of chapter 7, with the impact being more serious.
There are some requirements before one is deemed to qualify. One thing to understand first is that there are limits of debt that one can have. The unsecured and secured debts are not supposed to get past some amount. In case the debts are too much, one will not qualify. The other requirement is that you are supposed to prove that you have a steady income. Having a steady income means you need to afford your monthly expenses and still be able to make repayments.
This option is never available for companies. That means that only individuals are eligible. Nevertheless, business-related debts which one is personally responsible for can be part of the plan. That means that a sole proprietorship will be able to benefit.
When the repayment is completed, you should be able to show the court that you can afford all your monthly obligations. The counseling should also be complete. It is only then that the process can start to be finalized.
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Find an overview of the benefits of consulting a Chapter 13 Monterey attorney and more info about a reliable lawyer at http://www.centralcoastbankruptcy.com today.
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