A Chapter 13 bankruptcy is a reorganization or repayment plan. It is one of the most commonly filed chapters in South Carolina. It allows the debtor to keep their property and repay their debt over a time period of three to five years. It is designed primarily for debtors that have a regular income and it offers several advantages over a Chapter 7. Some common features of a Chapter 13 are listed below:
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Save Your Home:
If you are behind on your mortgage payments and facing foreclosure, filing a Chapter 13 will instantly stop any foreclosure action. Chapter 13 can eliminate judgments and second and third mortgages for pennies on the dollar; allowing you to repay the missed mortgage payments over time at 0% interest, and resuming your regular mortgage payment as if you never missed one.
Protect Your Vehicle:
If you are behind on your car payments, filing a Chapter 13 can end the threat of repossession. Once your case is filed, your car payment becomes part of your Chapter 13 plan for repayment. When you make your monthly Chapter 13 plan payment, the bankruptcy trustee assigned to your case will make your car payment at a court set interest rate of 5.25%, currently. When your case is complete, the vehicle will be paid off and your title mailed to you. However, if you have a title loan or you purchased your car more than 910 days (2.5years) before the date of filing, then you will only be responsible for paying the vehicle’s value, not the original loan amount.
Credit cards, pay day loan companies, medical and hospital bills, check cashing, and judgments are all forms of unsecured debt. A Chapter 13 enables you, potentially, to repay unsecured debt for as low 1% of the total. In other words, repay 1 penny for every dollar you owe. For example, if you have $100,000 of credit card debt, at 1%, you would repay $1000 at 0% interest, over 60 month term or $16.67 per month. The percentage you pay for unsecured debt is based on your ability to pay.
A Chapter 13 bankruptcy has incredible solutions in addressing tax debt from any source, including the IRS, the South Carolina Department of Revenue, as well as some county taxes. If taxes were filed and assessed more than three years ago, they will be treated as unsecured debt. If taxes were filed or assessed within the last three years, then you pay only the taxes owed at 0% interest. However, tax liens must be paid at 5.25% interest.
Student loans are not a dischargeable debt in any Chapter, meaning that you will still owe the loans when your case is finished. Usually, student loans will be placed in deferment for the life of your plan. However, you and your children still have the ability to get new student loans and continue higher education since the debt is non-dischargeable!