When a creditor may not have a valid lien, Chapter 13 gives you a good way to defeat that disputed lien and the claim against your property.
A Creditor Not Enforcing its Lien under Chapter 13
When a creditor fails to enforce its lien in a Chapter 7 case, you are left exposed. Not so under Chapter 13.
Illustrating the Option of Home Surrender Much Later under Chapter 13
Here’s an example of how Chapter 13 can allow you to hold onto your home but then change your mind about it later.
Give up Your Home Much Later under Chapter 13
As you decide whether to use the powerful tools of Chapter 13 to hold onto your home, it helps to know that you can later change your mind.
The Benefits of Giving up a Vehicle under Chapter 13
Chapter 13 gives you powerful ways to hold onto a vehicle, but it also lets you give up that vehicle without paying its debt.
A Creditor’s Unexpectedly Unenforceable Lien
For a debt to be secured, the creditor has to go through the right legal steps. Otherwise you don’t have to pay the debt.
A Creditor Not Enforcing its Lien
Sometimes, even if what you bought is legally collateral on a debt, you can just write off and not pay the debt yet keep what you bought.
Undoing a Judgment Lien
A judgment lien turns an unsecured debt into one secured by a lien on your home. Bankruptcy can undo that, and write off the debt.
Surrender the Collateral to turn the Secured Debt into an Unsecured One
A secured debt effectively turns into an unsecured debt if you surrender the collateral, which may make sense to do more than you think.
Secured Debts Treated Like Unsecured Debts in Chapter 7
A secured debt can be handled like an unsecured debt if you surrender the collateral, “avoid” a judgment lien, or just keep the collateral.
General Unsecured Debts Written Off under Chapter 13
To the extent you do not pay off your debts during a Chapter 13 payment plan, the remaining balance is usually legally written off forever.
Debts Partly Paid in an “Asset” Chapter 7 Case
If you have an “asset” Chapter 7 case, some or all of your debts are partially paid, with most or all of the remaining amounts written off.
Simple Debts Discharged in Chapter 7
In most straightforward Chapter 7 cases all debts not secured by any collateral are discharged–forever written off. You pay nothing on them.
Use Chapter 13 to Protect More Home Equity
If your home is exposed to your creditors and to the Chapter 7 trustee because it has too much equity, Chapter 13 can protect that equity.