Chapter 13 is a form of bankruptcy that utilizes “reorganization,” where you will still repay part or all of your debt. The process is fairly simple: we calculate your income and then subtract what the IRS says you should be able to live on. Every extra dollar is paid to a trustee who then pays your creditors for either three or five years. At the end of that time, if there are any unpaid unsecured debts, they are discharged and you go about your life.
This form of bankruptcy is more liberal about debt discharge and you can even renegotiate or “cram down” some debts that you cannot in Chapter 7. With a Chapter 13, you may be able to discharge your second or third mortgage, “cram down” the loan on your car, eliminate specific debt due to divorce, and/or renegotiate your other debts.
Chapter 13 bankruptcy is available to most debtors. It allows you to repay some debts, and discharge or modify others. Even if you qualify for a Chapter 7, you may want to file for broader opportunities under Chapter 13. However, to file a Chapter 13, you must have income because you will be required to repay some creditors for either three or five years.
Once we file a Chapter 13 bankruptcy petition on your behalf, creditor actions against you must immediately cease. This is called the “automatic stay” and it means that creditors cannot call you or take actions to repossess your car or to foreclose on your house for a period of time.
Many people are concerned that Chapter 13 bankruptcy will cause them to lose all their possessions, but as with Chapter 7 bankruptcy, your personal property is in fact protected.
Everyone’s financial and emotional circumstances are different. What path you choose will depend upon your own unique situation. Carolyn and Bill Duncan are knowledgeable, caring, and practical people who focus on leveraging the complicated bankruptcy laws to your benefit.
Contact us to set up a free bankruptcy consultation and let’s take the time to figure out the optimal debt-relief solution for your situation.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.