Secured debts such as your home mortgage or auto loans must be repaid. However, you only have to pay what you can afford for unsecured debts such as credit card and hospital bills. That may be as low as a few pennies on the dollar. The unpaid portion will be discharged after you successfully complete your payment plan. Your payment plan will be determined based on a variety of factors including your household income, equity in property, past-due mortgage payments and past-due car loan payments. Once a Chapter 13 payment plan is approved by the court, you are required to make payments for a period of time which usually lasts from three to five years. If your house is underwater on your first mortgage, you may be able to strip the lien from any second mortgages on your property. Once the lien is stripped, the second mortgage becomes an unsecured debt and may be discharged after the terms of the repayment plan are complete. With car loans, our lawyers may be able to lower the principal balance to the current value of your car.
Chapter 13 bankruptcy is similar to a debt consolidation plan, except it gives you the full protection of U.S. bankruptcy laws. Chapter 13 bankruptcy also protects you from home foreclosure, car repossession, wage garnishments and creditor harassment.
Filing bankruptcy can have a negative impact on your credit rating. This impact, however, is usually only temporary. Typically, your credit will begin to improve shortly after filing bankruptcy. If you are currently having serious debt problems, your credit may already be about as low as it can go.
Bradley P. Olson - Attorney at Law - 144 South Division Street, Carterville, IL 618-985-5262
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