Chapter 13 bankruptcy is recognized as a ‘wage earners’ insolvency. It enables Virginia people who earn a regular income to design a plan to pay off all or portion of their debts. Debtors propose a compensation plan to pay creditors in installments over 3 to 5 years under this chapter. If the debtor’s current monthly financial gain is less than the applicable state median, the arrangement will be for three years unless the court grants an extension “with cause.” During this time, the Virginia law prohibits creditors from beginning or continuing collection efforts.
It is easy to file Chapter 13 bankruptcy with the help of The Hampton Roads Law Firm of John W. Lee, P.C. They maintain a Newport News bankruptcy attorneys office along with four other locations in Hampton Roads who file bankruptcy for people under Chapter 7 and Chapter 13. Our attorney staff possesses over 70 years of experience in handling various legal matters. Even during pandemics, they have assisted their clients through phone, mail, and video chats.
Based on a few facts it is analyzed that Chapter 13 has more benefits than Chapter 7:
Chapter 13 gives people the opportunity to save their homes from being ruined by legal processes. People who file under this Chapter in Virginia will be able to stop the foreclosure process and should be able to catch up on their mortgage payments over time. However, they must continue to make all mortgage payments that are due during the Chapter 13 set up, on time. On the other hand, Chapter 7 is less forgiving and does not require people to line up for inexplicable payments.
Credit Reports Are Listed for a Shorter Period
Chapter 13 bankruptcy appears on a credit report for 7 years, while a Chapter 7 bankruptcy appears on a credit report for 10 years. If you filed a Chapter 7 bankruptcy, creditors will be able to track you for 3 years longer. If a Chapter 13 bankruptcy is filed, it has a far smaller impact on an individual’s credit.
Schedule Debts Repayment with Protection
Another benefit of Chapter 13 is that it allows people to schedule secured debts and spread them out throughout the Chapter 13 plan. This may result in decreased compensation. Chapter 13 functions as a debt consolidation loan in which the debtor pays initial funds to Chapter 13 trustee, who then pays the amount to creditors. People are unable to communicate directly with creditors while under Chapter 13 protection.
Chapter 13 also has a specific clause that protects third parties who are accountable alongside the person for “consumer debts.” This clause could protect co-signers.
If you’re unsure under which Chapter you should file bankruptcy, it is the right time to talk to a lawyer who knows all Virginia bankruptcy laws properly.