What is Chapter 13 Bankruptcy?

Many people like to refer to Chapter 13 bankruptcy as the “catch your breath” provision of the Bankruptcy Code. It is designed for people who have money to pay back their creditors but who can’t do it all tomorrow like the creditors are demanding.  Chapter 13 bankruptcy allows you stop the harassing phone calls and lawsuits.  Chapter 13 bankruptcy gives you time to catch your breath while you pay your creditors. Chapter 13 bankruptcy stops garnishments, foreclosures, and repossessions of your car. You do not need the permission of your creditors to obtain Chapter 13 bankruptcy protection.

The first step is to make a list of all of your debts. When you come to my office, I am going to review your income and create a budget for you. Then, we can propose a monthly payment that you can afford. You pay this new amount to the trustee each month and it covers all of your consumer debt. This one amount covers all credit card debt, medical bills, finance companies, and car notes. In some cases, we can even include IRS tax debt in this total. It even lets you get caught up on back mortgage payments and stops the interest and penalties on back taxes. In your Chapter 13 bankruptcy plan, the credit card companies and all other unsecured creditors are barred from collecting interest. If you owe $10,000 in credit card and have an interest rate of 25 percent, you can save $2,500 per year in just credit card interest alone. If Chapter 13 bankruptcy is not a good option for you, I will tell you.  I receive many referrals from my clients because they know I shoot straight with them.

How much you pay each month depends on what you can afford, not what the creditors demand. Depending on your income and budget we may be able to wipe out all unsecured debt in your Chapter 13 bankruptcy plan.

It doesn’t cost you anything to come into my office, meet with me, and see what kind of plan might work for you.

Some bankruptcy attorneys will advertise chapter 13 as bill consolidation.  Personally, I don’t think this type of advertising is completely honest.  Chapter 13 works like a bill consolidation but there is no loan being made to consolidate everything.  In a Chapter 13, you are protected from the collection efforts of your creditors while you pay them back over the life of your plan.

Other posts you might be interested in reading.

1. What is Chapter 7?

2. How much does it cost to file?

3.  How do I stop a garnishment?

4.  How do I stop a foreclosure?

5.  Can I convert my chapter 13 to a 7?

6.  What happens in a chapter 13 after my 401k loan is paid off?

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DISCLAIMER

The information contained on this page is for information only. It is not intended to be legal advice, nor should you make legal decisions based on this information. Please consult with me to see how the law applies to your particular situation.