Chapter 13 bankruptcy is the form of personal bankruptcy that generally offers the strongest protections for things like your home and car while also giving you unique tools to get your debt back under control.
If you’ve fallen behind on bills but still have regular income, filing bankruptcy under Chapter 13 may allow the breathing room you need to get back on track with your payments and keep your property.
Often, people find Chapter 13 bankruptcy helpful when:
- You are behind on payments for property you want to keep. Many people file Chapter 13 bankruptcy specifically to stop foreclosure on a home or keep a car from being repossessed. But Chapter 13 may be equally useful for catching up on other secured debts while keeping the property that secures the debt.
- You have tax debt. Certain tax debts are non-dischargeable but some may be included in a Chapter 13 repayment plan and paid over time.
- You are not eligible to file Chapter 7 bankruptcy.
- You wish to protect co-signers. In a Chapter 7 bankruptcy case, a co-signer remains liable for a debt even if that debt has been discharged for the primary debtor. However, if a debt is included in a Chapter 13 repayment plan, the co-signer is protected so long as the debtor complies with the plan.
Chapter 13 bankruptcy offers two major benefits over Chapter 7 bankruptcy. 1) Any late payments or “arrearages” can be made up over the repayment periods. 2) Second mortgage or home equity lines of credit (HELOC) may be “stripped,” potentially eliminating your second mortgage or HELOC. This Chapter can be useful to people who are facing foreclosure, have property they want to keep or for those who need bankruptcy protection, but do not qualify under Chapter 7 bankruptcy.
One very important thing to remember about Chapter 13 bankruptcy is that you must be working or have a consistent source of income for your repayment plan to be approved by the court. Your Wilmington Delaware bankruptcy lawyer at Huang Law LLC will help guide you through the process of filing a Chapter 13 bankruptcy in Delaware that provides you the maximum benefit and relief from creditors.
