[COLUMN] You can reduce your debt under federal law –


DO you find it difficult to pay off your debts each month, especially your credit cards? Do you have little left over to pay for your mortgage, rent, groceries, and other basic living expenses after making your monthly debt payments? Want to lower your payments and make life a little easier?

A type of legal relief for indebted persons results from Chapter 13 of the Insolvency Act. Commonly known as “Chapter 13 Debt Consolidation or Debt Adjustment,” it is widely available to individuals and small business owners. It’s called “consolidation” because it allows you to consolidate your debt into one monthly payment. But it’s also called “debt adjustment” because in many cases, most debts can be “adjusted down” so you don’t have to pay them in full.

Let’s say you owe $25,000 in credit cards that require you to make minimum payments of between 3% and 4% of the outstanding balance. Thus, your payments on the above amount will be around $750-$1000 per month. Because of the high interest rates on your credit cards, 80-90% of your minimum monthly payments go into interest alone. Very little is applied to the principal. The banks keep getting richer as they pull the money out of your pocket. You can’t even afford new tires for your car and your bank account is constantly overdrawn. You feel like you’re playing a game you just can’t win.

In our example above, paying $750 to $1000 feels like having a tooth pulled every month. For some people, this could equal a paycheck or more. So if they’re getting paid twice a month, one paycheck goes to paying credit cards, while the other paycheck goes to “everything else.” And there lies the problem. There never seems to be enough money to pay for “everything else”.

If you find yourself in this situation, consider the benefits of Chapter 13. Although each situation is different, in Chapter 13 you generally only pay based on what you can afford each month. The court examines your income and all monthly living expenses and determines whether there is a surplus. For example, if the court finds that you have $200 left after paying all of your living expenses, that’s all you have to pay. Depending on your income, you may be asked to pay for 3 to 5 years, but 3 years is typical. Now you might be wondering, “If I only pay $200 a month for 3 years, does that mean I won’t be able to pay off all my debts in full, right?” What happens to the unpaid balance after 3 years?”

Well, that’s exactly one of the biggest benefits of Chapter 13. Besides paying 0% interest on credit cards and most debt, you are NOT required to pay off all debt in full if you can’t afford to. After you make all your Chapter 13 payments, the remaining debt will be paid off in full. That sounds amazing, but it’s true. You can consolidate all types of debt in Chapter 13: credit cards, personal loans, late mortgage or car payments, property taxes, income and other taxes, student loans, child support, etc.

Compare the benefits of Chapter 13 (0% interest on credit cards and most debt, lower payments, reduced debt amounts, paying off debt in just 3 years) versus trying to pay off your debt yourself and paying the outrageous interest rates charged by banks and Credit card companies are charged. You’ll be shocked to see how much easier paying off debt with Chapter 13 can become than doing it alone. Need to rebuild your bankroll and start saving again? Or do you dream of one day buying a house but most importantly need to get out of debt? If your debt has become unmanageable and you need legal help, find out if Chapter 13 can benefit you. Call my office at 866-477-7772 and schedule a free initial consultation with me so we can talk about your specific situation.

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NOTE: Due to pandemic safety concerns, I am offering free phone consultations to anyone who needs help managing their debt issues.

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None of the information contained herein is intended as legal advice for any particular situation. atty Ray Bulaon has successfully helped over 6,000 clients get out of debt. For a free legal evaluation of your situation, please call RJB Law Offices at 1-866-477-7772 TOLL FREE.

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