Chapter 13: How to be debt-free in 3-5 years

“ This means that most of what you are paying goes to interest alone and you may be stuck in debt for the rest of your life.”

WHEN people think of bankruptcy, oftentimes they think of the worst thing that could happen to them- losing their home, cars and other assets that they have. The truth is that most people who file bankruptcy lose nothing and keep everything.

Not all bankruptcies are the same. For individuals, it is usually either a Chapter 7 or Chapter 13. In Chapter 7, assets may be taken and sold but only if they are considered non-exempt by law. Most people don’t have much (usually a home, a car, a retirement plan and a few personal items) and a lot, if not everything that they have, can usually be protected even if they file bankruptcy.

In this article, I want to specifically talk about Chapter 13. Chapter 13 is the section of the bankruptcy code that allows you to restructure your debts and pay only what you can. You don’t necessarily have to pay back 100% of your debts, only if you have enough income. But if you don’t, it’s possible to reduce your debts in half or even more in a lot of cases. Another advantage of filing Chapter 13 is that if you are worried about losing valuable assets or property, this is the type of bankruptcy that may be right for you because there is NO RISK of losing anything at all.

Chapter 3 takes anywhere from 3-5 years to complete. The interest rate on your credit cards and most debts become ZERO. That’s right! The reason most people find it impossible to get out of debt is because they are paying the credit card companies anywhere from 17-29% interest per year. This means that most of what you are paying goes to interest alone and you may be stuck in debt for the rest of your life.

In Chapter 13, you can also combine all your debts no matter what they may be: taxes, student loans, medical bills, credit cards, personal loans, payday loans, etc. All your bills are combined into one low monthly payment. So instead of writing a lot of checks every month, you only have one bill to pay. If you are a homeowner and you have fallen behind on your mortgage payments, you can also stop foreclosure and bring your account current by including your late payments in your Chapter 13.

Don’t fall for the debt consolidation or debt settlement companies that you see advertising on TV, radio and on the internet. These people are NOT lawyers and cannot help you if you get sued by your creditors. If you sign up with one of these companies, most of the time, they do not fully explain to you the services that they are providing and the fact that you can still be sued by your creditors while on their program.  They also don’t tell you that hiring them can actually result in making your credit even worse than it already is.

If you are employed or have a source of income, Chapter 13 may help you not only greatly reduce what you owe but it can also give you the relief you need from financial stress, creditor calls and other collection actions. You owe it to yourself to at least find out about it so you can decide for yourself if it is best for your situation.

If you are in debt and would like to get out, I’d like to help you explore all your options. For a free consultation, call my office at Toll-Free 1-866-477-7772 so I can carefully review your situation and all available options.

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None of the information herein is intended to give legal advice for any specific situation.  Atty. Ray Bulaon has successfully helped thousands of clients in getting out of debt. For a free attorney evaluation of your situation, please call  Ray Bulaon Law Offices at  TOLL FREE 1 (866) 477-7772. 

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