This is the next post in a series of articles discussing the potential benefits of Chapter 13 bankruptcy for subprime borrowers in Olympia or Tacoma, Washington. Our previous post provided an overview of the topics to be discussed throughout this series. It also stressed the importance of consulting with experienced bankruptcy counsel if you are struggling with subprime debt and unsure whether bankruptcy is right for you. Many people are afraid to consider bankruptcy as an option because they believe it will negatively impact their financial future. The truth of the matter is that Chapter 13 bankruptcy can actually help rebuild one’s credit while providing protection from creditors. In this post, we will review the primary benefits of the Chapter 13 process. If you need assistance, contact our office today to schedule a consultation with an attorney.
For individuals caught in the subprime debt trap, the prospect of managing one’s financial obligations can seem hopeless. Even in the face of mounting debt, creditor harassment, or losing one’s assets, many residents fail to consider Chapter 13 bankruptcy as an option. The fact is, there are numerous benefits to Chapter 13 bankruptcy, particularly for debtors who have subprime or high-interest debt. One primary benefit is the automatic stay, which goes into effect as soon as a debtor files bankruptcy. The stay prohibits creditors from contacting the debtor or attempting to collect amounts owed while the case is pending. This means that the harassing phone calls, letters, court actions, and other collection efforts must immediately cease. In addition, the stay precludes lenders from taking actions to repossess vehicles and foreclose on mortgages. Chapter 13, unlike Chapter 7, does not require debtors to liquidate assets to pay their debts, allowing them to keep their vehicles, homes, and other treasured possessions through the process.
In addition to the relief described above, the Chapter 13 process provides a mechanism for debtors to reduce their debt and repay the reduced amount to their creditors over time. Very often, interest rates on outstanding loans are lowered to more conventional levels. In some cases, auto loans may be reduced if the borrowed amount is more than the value of the vehicle. Other debt, such as second or third mortgages, may be stripped away entirely at the end of the repayment period. This gives individuals the breathing room they need to pay overdue amounts, eliminate high-interest debt, and make ongoing payments at a reduced rate. The combination of these factors can make previously unmanageable bills manageable once more. Debtors can begin rebuilding their credit during the repayment period and often improve their credit scores faster than if they would have attempted to juggle late payments on their own.
Individuals struggling with subprime debt should consider the benefits of Chapter 13 bankruptcy when weighing their financial choices. Our office is ready to consult with you about the process. If you need assistance, contact us to speak with an Olympia lawyer. Our firm also services the Thurston County cities of Lacey, Tumwater, and Yelm, the Pierce County cities of Tacoma, Puyallup, and Lakewood, the Lewis County cities of Centralia, and Chehalis, the King County cities of Seattle, Auburn, Bellevue, Burien, and Federal Way, as well as other areas in Washington, including Grays Harbor, Mason, Cowlitz, and Pacific Counties.