Most Chapter 13 plans enable debtors to discharge a certain amount or even the entirety of their unsecured debt. However, in some instances, the debtor may not be eligible for debt discharge or they may consciously opt to repay their debts in full.
This is where the so-called “100% plan” comes into play. With it, the debtor commits to repaying 100% of the secured and unsecured arrears over the course of 3 to 5 years, through a comprehensive repayment plan created with the help of an experienced Chapter 13 bankruptcy attorney in San Diego.
What is a 100% Chapter 13?
Obviously, the question on everyone’s mind is: “Why would anyone opt for a 100% repayment instead of discharging a large portion of their debt?” Well, it’s because this type of arrangement carries numerous advantages that aren’t typically included in “standard” Ch 13 repayment plans. Here are some of the most noticeable benefits:
- Pushing for success: 100% Chapter 13 is one of the fastest ways to regain financial independence. Debt consolidation and a structured repayment plan keep you focused on the end objective, resulting in a debt-free life in as little as 3 to 5 years.
- Protection from interest build-up: Even if you’re paying off your (unsecured) debt installments on time, the interest charges continue to mount, resulting in an endless circle of “paying just a little bit more” every time. With a 100% plan, you’re only making payments that directly reduce the original amount owed on the debt – with 0% additional interests or late fees being mounted atop the existing debt.
- Automatic stay: Arguably one of the biggest benefits of bankruptcy in general is that it protects you from creditor harassment. The moment you file for Chapter 13, an automatic stay goes into effect, stopping any direct or accelerated collection efforts such as wage garnishment or repossession. In essence, this forces creditors to adhere to the terms set forth by a repayment plan, protecting you (and your property) from their advancements.
- Possibility of debt discharge: 100% Ch13 does not eliminate the possibility of unsecured debts being discharged. In fact, it shifts responsibility to creditors. Once you file for Chapter 13, they receive a notice and have 6 months to file a Proof of Claim with the CA Bankruptcy Court. If they fail to do so within the given period, the Court discharges the debt and you’re no longer legally obligated to repay it!
- Credit score improvement: As you make consistent and timely payments, your debt-to-income ratio will start to decrease. What this also means is that your creditworthiness will start to increase automatically as you regain your financial footing.
- Equity/mortgage conversion: Home equity loans or a second mortgage are typically secured debts. However, in a 100% Chapter 13 plan, they can be converted to unsecured debt, meaning you can continue to pay them at a 0% interest rate.
Who’s the leading Chapter 13 bankruptcy attorney near me in San Diego?
Looking for a sound strategy to get out of debt faster or to reduce the total amount you have to repay? Look no further than the Bankruptcy Law Offices of Mark L. Miller! As San Diego’s front-running Chapter 13 specialists, we’re here to shed light on the secrets of the bankruptcy process and help you regain your financial security.
Count on us to be there for you 24/7 to offer mindful advice, expertise-based guidance, and personalized strategies that best fit your unique circumstances. Reach out to us today to schedule a free consultation at our offices near Whaley House and let us help you head into the future with the utmost confidence!