These days, it is not unusual for someone to experience a downturn in income. For example, you might still be employed but only because you agreed to a cut in pay or a change from full-time to part-time work.
If you are behind in your auto payments and are afraid repossession of your family SUV is imminent, filing for bankruptcy protection may be the next logical step. Chapter 13 can help you keep your vehicle and more.
How Chapter 13 works
Chapter 13 bankruptcy allows you to work out an affordable monthly payment plan to resolve your debts. This type of bankruptcy protection allows you to keep your property, such as your home and your SUV, and repay your creditors often within a period of three to five years.
A look at disadvantages
You must pay your debts out of your disposable income. Therefore, any funds that remain after you pay for necessities such as shelter, food and medical care, must go toward your repayment plan. You will also lose your credit cards; however, you will likely qualify for obtaining new credit in one to three years although at higher interest rates.
Payment plan benefits
The benefits of a Chapter 13 payment plan outweigh the disadvantages:
- Lower car payments and a reduction in the balance owed
- Reduction or elimination of interest on many debts
- Ability to catch up on past due mortgage payments over 60 months
- Ability to catch up on past due property taxes over 60 months
- Reduction or elimination of federal income taxes
A fresh start
Chapter 13 can help you avoid the threat of repossession. A debt-free future is worth the time it takes to discharge your obligations through a monthly payment plan you can afford.