There are many reasons for people to file for Chapter 13 bankruptcy. One reason in particular is the effect it can have on your car loan. People in Chapter 13 have a chance to reduce their interest rate on a car loan. People with a poor credit rating often get a terrible interest rate on their car loan — 15, 20 percent and even higher. (Learn more about your credit rating here.)
There are significant benefits to filing Chapter 13 bankruptcy versus other forms of bankruptcy. In particular, the amount of debt you pay back in the end can be a fraction of the original debt.
With that said, because Chapter 13 is beneficial, there are also rather stringent qualifications and conditions.
There are many conditions of bankruptcy — some well known and others not so well known. Here are some facts that we consistently find people are misinformed about, or simply do not know about.
One problem that people face when they’re considering bankruptcy is a concern about wage garnishment. That’s why one of the reassuring aspects of Chapter 13 bankruptcy is the protection it offers in regard to being sued or having wages garnished. When you file the bankruptcy, an automatic stay is enforced. It stops all legal action against you — in effect acting like a preliminary injunction against the collection of a debt.