As a bankruptcy attorney in Dallas I have consulted hundreds of homeowners trying to stop foreclosure after being denied a loan modification. While these homeowners followed their lenders directions to the tee in an effort to avoid foreclosure, they ended up with a foreclosure sale date hanging over their head. The unfortunate thing is they trusted their lender to act in their best interest and now may lose their home to foreclosure.
Can I Still benefit from a Chapter 13 Bankruptcy if I make too Much Money to File a Chapter 7?
Even if a debtor is disqualified from filing a Dallas Bankruptcy based on income there are still significant benefits which can be achieved by filing a Chapter 13. In fact, being disqualified from a Chapter 7 may not turn out to be a disadvantage at all if the filer has a significant equity value in assets beyond a home and an automobile. While a filer’s home and a vehicle can generally be retained under both types of bankruptcy filings as long as their equity doesn’t exceed bankruptcy code limitations, a Chapter 13 filing will provide advantages in areas of asset valuations and assets which are considered to be non-exempt in a Chapter 7 Bankruptcy. Antique collections, second homes, and rental properties can be retained in a Chapter 13 but would have to be surrendered to the court in a Chapter 7, for example.
These advantages are maximized in a Chapter 13 Bankruptcy when there are extensive assets with attached equity over and above the valuation caps placed on assets in a Chapter 7 filing. The flexibility of these asset valuations is then combined with a repayment plan set by the court for debts listed in the filing. Additionally, the repayment of court-reduced debts under Chapter 13 reorganization carries certain advantages over the discharge of debt commonly seen in Chapter 7 Bankruptcies. The main advantage here is that a Chapter 13 Bankruptcy typically shows on credit reports for around seven years as opposed to the ten year duration for a Chapter 7. This allows for an earlier start and a faster rebuilding process for a filer’s credit score.
A Chapter 13 filing can also allow for the “cram-down” of auto loans which can result in much lower payments and a reduction of the outstanding balance on the way toward paying off the vehicle in full. A cram-down requires that the vehicle must have been purchased at least 910 days prior to the filing of the Chapter 13 bankruptcy. In a cram-down, the loan balance is reset to the vehicle’s current market value. The remaining payment period can also be extended, lowering payments and saving thousands of dollars for the filer.
There are other benefits of Chapter 13 Bankruptcies as well including the stopping of foreclosure proceedings and the discharge of subordinated mortgages which have become unsecured due to a decrease in the value of the associated property. A Chapter 13 bankruptcy is usually far more complicated than a Chapter 7. To ensure the best results, insist on working with an experienced bankruptcy attorney.