Chapter 13 Bankruptcy

What is a Chapter 13 Bankruptcy?

A chapter 13 bankruptcy is repayment or reorganization of debt.  The repayment plan can be structured over a three to five year period.  In structuring the Chapter 13 plan you can propose to pay all or very little of your unsecured debt such as credit cards, medical debt, personal loans, while repaying missed mortgage payments, car arrears, and other secured debt.

It is also called a wage earner’s plan because it required income to afford the repayment of debt.  It is most often used when a filer does not qualify for Chapter 7 due to high income or a prior case filing or needs to reorganize on a house, car, or taxes. It enables individuals with regular income to develop a plan to repay all or part of their debts. Under Chapter 13 bankruptcy, debtors propose a repayment plan to make installments to creditors over three to five years.  This payment is paid through a bankruptcy trustee.

Chapter 13 allows a “wage earner” or working individual to set up a court-supervised plan to repay debt. Most commonly used to halt a foreclosure and repay missed mortgage payments while also restructuring other debt, Chapter 13 is a powerful tool in helping financially distressed individual keep their home and recover from financial setbacks. The Chapter 13 plan also has the ability to extend the time of repayment of debt and is general structured over a three to five year period.

Common Ways Consumers Use Chapter 13 Bankruptcy:

• Stop foreclosure and catch up on missed mortgage payments;
• Stop repossession and restructure a vehicle loan to become current and lower the monthly payment;
• Stop garnishments and pay non-dischargeable debt such as some taxes, fines, child support;
• If you filed a Chapter 7 recently use Chapter 13 to restructure.

Unlike a Chapter 7, which can only be filed every 8 years to eliminate unsecured debt, a Chapter 13 can be filed more often.  You can also eliminae debt in a Chapter 13.  This is a useful feature to help households bring down their monthly expenses more in line with their income.

Do you think you might need a Chapter 13? Call and speak for free to one of our Chapter 13 attorneys or schedule a free consultation.  We can work out a plan for you to save your property and rebuild your future.

For more information on the Chapter 13 timeline click this link.