Chapter 13 Explained By Massachusetts Bankruptcy Lawyers
One of the most important points about filing a Chapter 13 bankruptcy in Massachusetts, is that by filing under this chapter, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time. Nevertheless, they must still make all normal mortgage payments on time that come due during the chapter 13 plan.
Rescheduling Secured Debts
Good Massachusetts bankruptcy lawyers will explain that another advantage of Chapter 13 over Chapter 7 is that it allows you to reschedule secured debts (other than normal mortgage payments on a primary residence) and extend them over the life of the chapter 13 plan. Doing this will almost always lower the monthly payments that the debtor needs to make. For example, if an individual owes the IRS past-due taxes, and has reached an agreement to pay those past-due taxes at the rate of $500 per month, they could reschedule those monthly payments under a chapter 13 plan, and (depending on what their monthly disposable income is) they could wind up paying the IRS only $250 per month during the plan period.
It’s also important to note that another advantage of Chapter 13 bankruptcy over Chapter 7 is that it has a special provision that protects 3rd parties who are liable with the primary debtor on consumer debts. This provision basically protects co-signers or co-debtors. Unless the bankruptcy court allows otherwise, a creditor may not seek to collect a consumer debt from any individual who is liable along with the debtor. Consumer debts are those debts incurred by an individual primarily for a personal, family, or household purpose.
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