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Chapter 13 Bankruptcy

Chapter 13 Bankruptcy Information

Chapter 13 Bankruptcy Overview

Chapter 13 lawyer

A Chapter 13 bankruptcy is designed to help you organize your debt into manageable payments over a short fixed period of time, so that you can get back on your feet and move forward.  Chapter 13 bankruptcies make up approximately 30% of non-business bankruptcy cases. A Chapter 13 filing involves repaying some of your debts to have the rest forgiven.  It is an option for people who do not want to give up their property or don't qualify for Chapter 7 bankruptcy because they fail the means test.

In general, a Chapter 13 might be preferable over a Chapter 13 if: a) you are behind on payments for assets that you want to keep, such as your home and vehicle; b) you have current tax debts that can't discharge; c) you have nonexempt property that you wish to keep after bankruptcy that you couldn't keep in a Chapter 7; d) you have received a Chapter 7 discharge within the previous eight years; e) you want to protect the consignors on your debts; f) you want to consolidate your student loans. 

Your Chapter 13 bankruptcy begins with the preparation and filing of a petition with the Bankruptcy Court.  After we file your petition, the bankruptcy court clerk will send a notice of your bankruptcy case to all of the creditors listed in your petition. A bankruptcy trustee will then be assigned to review your case.  An "Automatic Stay" will be issued by the court that will prevent most of your creditors from taking any further action against you outside of bankruptcy court.  Consequently, filing the petition should accomplish the following: a) stop call and bills from creditors; b) protect most of your property from seizure; c) prohibit most creditor lawsuits against you; d) prevent foreclosure of your home; e) stop wage garnishments; and f) block repossession of your vehicle.

The court will establish a repayment plan between you and your creditors whereby you agree to repay your debts or a portion of your debts over a period of time--generally three to five years.  You will make monthly payments to the bankruptcy trustee assigned to your case, who will make payments to your creditors.  Your creditors as listed in the repayment plan are required to abide by the terms of the plan and are prohibited from taking any collection actions against you. The period of time that you are given to make payments is generally three or five years.  After the successful completion of this three or five year period, your remaining dischargeable unsecured debt is eliminated.  

Your Chapter 13 bankruptcy is meant for individuals with a regular source of income.  The plan is structured so that your will be able to meet its terms.  That means that you need to have income left over after your monthly expenses for basic needs have been met to make your monthly plan repayments.  The court will usually require that you submit a proposed budget to see if you can make your repayments. If you don't successfully finish your plan, you may pursue a Chapter 7 plan or creditors may resume their attempts to collect. If your debts are too high, then you may not be eligible for Chapter 13, but Chapter 7 may be available.   

Take action to take back control of your financial situation.  Everybody deserves a second chance to put their financial affairs back in order.  

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