Dealing with your financial issues takes time, patience and planning. One option you have for dealing with your climbing debt is to file Chapter 13 bankruptcy. By gathering some additional information, you may discover that this debt relief option is the best choice for handling you climbing debt.
With Chapter 13 bankruptcy, you make a plan with a lawyer and a trustee to pay back your creditors. However, this repayment plan can become harder if you have to pay back liens or second mortgages on your home. Luckily, with this type of bankruptcy, you may be able to get a lien removed so you do not have to pay it back.
When it comes to the money you owe on your home, your first responsibility is to the bank that controls your mortgage. If the house were to go into foreclosure, this bank would see all of the profits from a foreclosure sale.
To help you reduce your chances of losing your home, you can request that the courts discharge or remove any lien from your property. This request allows you to make a reasonable repayment plan for your home, and you do not have to worry about the extra money you owe to another bank that used your home as collateral.
Cram Down Loans
Another issue when filing for bankruptcy is the value of an item versus the amount of money you owe. When this happens, the item is not worth the amount you need to pay, so you may think that allowing the courts to sell the item to pay off your debt is a better option.
In truth, you may be able to get the courts to agree to a cram down loan. With this method, the courts bring down the amount of what you owe to the exact value of the item. For example, if your vehicle is only worth $3,500 but you owe the loan company $5,000, the cram down loan option would bring the new repayment amount down to $3,500.
Choosing this option can help you retain your vehicle, while making the monthly payments easier to make. You can also use this method when you owe money on mortgages for investment properties and furniture that you bought using store credit instead of a credit card. It is, however, important to note that you cannot use this method to lower your mortgage rate.
When you want a reliable way of repaying your creditors, you should look into all of your options. Chapter 13 bankruptcy works well when you want to lower the amount of money your creditors will receive. However, before you make a decision, you need to consult a lawyer like one from Howard S. Goodman Bankruptcy Attorney so they can help you understand how bankruptcy will work in your situation.