If you're struggling with overwhelming debt, you may have heard of Chapter 7 and Chapter 13 bankruptcy. However, you may not be familiar with Chapter 20 bankruptcy, which is a combination of these two types of bankruptcy. In this blog post, we'll explain what Chapter 20 bankruptcy is and how it can help you get back on your feet financially.
Chapter 20 Bankruptcy Explained
Chapter 20 bankruptcy is not an official term used in the bankruptcy code. Instead, it refers to a strategy where a debtor files for Chapter 7 bankruptcy first to discharge unsecured debts, such as credit card debt and medical bills. Then, the debtor files for Chapter 13 bankruptcy to reorganize secured debts, such as a mortgage or car loan, into a repayment plan.
Benefits of Chapter 20 Bankruptcy
Chapter 20 bankruptcy can offer several benefits for debtors who are struggling to make ends meet. For example:
1. Discharge unsecured debts: Chapter 7 bankruptcy can discharge most unsecured debts, such as credit card debt and medical bills, which can provide much-needed relief for debtors.
2. Repay secured debts: Chapter 13 bankruptcy can help debtors catch up on missed payments for secured debts, such as a mortgage or car loan, by creating a repayment plan that fits their budget.
3. Stop foreclosure and repossession: By filing for Chapter 13 bankruptcy, debtors can stop foreclosure and repossession of their property and keep their homes and cars.
4. Protect co-signers: Chapter 20 bankruptcy can protect co-signers on loans from being pursued by creditors for any remaining debt.
Considerations for Chapter 20 Bankruptcy
While Chapter 20 bankruptcy can be a useful tool for debtors, there are some considerations to keep in mind:
1. Eligibility: To file for Chapter 13 bankruptcy, debtors must have a regular income and be able to make monthly payments under a repayment plan.
2. Timing: Debtors must wait at least four years between filing for Chapter 7 bankruptcy and Chapter 13 bankruptcy to be eligible for a discharge of unsecured debts.
3. Costs: Filing for bankruptcy can be expensive, and debtors should be prepared to pay filing fees and attorney fees.
If you're considering Chapter 20 bankruptcy, it's essential to work with an experienced bankruptcy attorney who can guide you through the process and help you make informed decisions about your financial future.
Contact Our Chapter 20 Bankruptcy Lawyers
At Law Offices of Marshall D. Schultz, we understand the stress and anxiety that comes with overwhelming debt. Our bankruptcy attorneys have the knowledge and experience to help you find the best solution for your unique situation. Contact us today to schedule a free consultation.
Looking to file for bankruptcy in Michigan? Contact our Chapter 13 bankruptcy lawyer online or call (888) 822-6730. Your initial consultation is FREE of charge.