What are the benefits of filing for Chapter 13 bankruptcy in Ohio?
Many people are not aware that there are two types of bankruptcy today. Chapter 13 bankruptcy is a special type designed for people who have a good income but still cannot pay all the overdue bills. It involves making payment plans and restructuring debts. You should know the primary benefits of filing for Chapter 13 bankruptcy.
Consolidate All Your Payments
One benefit of Chapter 13 bankruptcy is that it allows you to consolidate all your payments to creditors. You normally have to pay each creditor like a utility company or credit card company separately and at separate times. The restructuring done during the bankruptcy processes consolidates this all down to a single bill that you need to pay monthly. This can greatly simplify your finances.
Stop Revolving Late Fees
If you have fallen behind in your payments to creditors, then you are likely facing late fees every month. These fees can add up fast and drive you further into debt. Filing for Chapter 13 bankruptcy has the advantage of immediately stopping these revolving late fees. You will be able to start paying down just the debt that you currently owe without worrying about accruing more each month.
Temporarily Halt a Foreclosure
A major benefit of Chapter 13 bankruptcy is that you can temporarily halt a foreclosure. If your home is being foreclosed upon, then the bank is required to stop any actions until the resolution of the bankruptcy hearings. This can allow you and your family to continue living in the house. You might even be able to work out an agreement with the bank to start making modified payments until you are caught up on the mortgage.
Reduce What You Owe
Chapter 13 bankruptcy can allow the court to reduce what you owe. Something that frequently occurs is that your debts are permanently reduced as part of the restructuring process. You might not have to pay everything back. The court could reduce the amount you have to pay to 90 percent, 50 percent or even 10 percent of what you originally owed. This can help immensely since it will take you less time to repay all your creditors and become financially independent again.
Lighter Impact on Your Credit History
A final benefit is that Chapter 13 bankruptcy has a lighter impact on your credit than other forms of bankruptcy. Chapter 13 bankruptcy will stay on your credit history for just seven years. Alternately, Chapter 7 bankruptcy will remain visible on your credit for a full decade. This allows you to start rebuilding credit faster after the bankruptcy.