Chapter 13 Bankruptcy
Chapter 13 bankruptcy is a “reorganization” of your debts and is designed for people that have regular income but need time to pay back certain kinds of debts (like defaulted home mortgages). It can best be defined as a restructuring and consolidating of debts into a more manageable plan for repayment. Chapter 13 recognizes that some debts can’t be paid back in full, but it gives most people an opportunity to pay what they can afford, above living expenses, over a 3 to 5 year period.
At the end of the approved reorganization, the balance of unpaid debts generally will be discharged and you will be free of your obligations. At the Bankruptcy Law Center, we are happy to work with you to determine if a reorganization is the best way for you to eliminate and deal with your debts. Some of our attorneys used to work for the Chapter 13 trustee and they know exactly what works and how to get your plan approved by the Court. Of course, we will look at the debts you owe and advise you as to which form of bankruptcy filing is appropriate.
If Chapter 13 is a viable resolution to your current challenges, we will aid you in forming a repayment plan that best suits your current income situation. After we formulate a plan that works for you, we file it with the court. It is reviewed by the Chapter 13 trustee and the court decides plan is fair and meets all the requirements of the law. If so, the courts will approve and oversee the plan, ensuring that your creditors are paid while you are able to handle the monthly payments more easily.
In most cases, your repayment must start within 30 to 45 days of filing your case, and the overall plan typically lasts three to five years. So why would you choose Chapter 13 over Chapter 7 when Chapter 7 quickly gets you a discharge of your debts? Simple. Generally Chapter 13 is used by people that want to save their home or property from foreclosure, but they need time to pay back the lender.
Sometimes people owe taxes that they can’t pay and Chapter 13 allows them time to get the tax man off their back, stop wage garnishments, and pay what they can afford over a longer period of time. And there may also be a few people that have relatively high income, a lot of debt, but the bankruptcy law (because of the “means test”) won’t allow them to file Chapter 7. We are very experienced in guiding clients through all of these situations and our lawyers been doing it for a long time. For the right cases, Chapter 13 can prove highly beneficial. It can stall foreclosures, positively work with debts not discharged under Chapter 7 bankruptcy, and get debt collection agencies or the IRS to leave you alone.