What is a Chapter 13 Bankruptcy
A Chapter 13 bankruptcy is a type of bankruptcy that allows you to pay all or a portion of your debts through a manageable repayment plan. The term of the repayment schedule in a Chapter 13 bankruptcy will range from 3–5 years. The three most common reasons for a filing a Chapter 13 bankruptcy are (1) because your Chapter 7 bankruptcy means test and disposable income calculation indicates you are ineligible for Chapter 7 bankruptcy, (2) your objective is to stop foreclosure of your home or repossession of some other exempt asset with significant equity, and (3) a significant portion of your debts are not the types of debts dischargeable in bankruptcy. Link to article on dischargeable debts
The reasons above for filing a Chapter 13 bankruptcy are not exhaustive. There are numerous other reasons a Chapter 13 may be a better option than a Chapter 7 bankruptcy for your situation. For example, just as in a Chapter 7 bankruptcy, you must repay secured creditors (think mortgage companies, car loan institutions) if you intend to keep your car or keep your home in bankruptcy. However, in the case of a car loan and loans for personal property such as electronics or appliances in a Chapter 13 bankruptcy, you may be able to have the interest rates reduced. In some instances, you can even reduce the principal, the overall amount you owe on a car loan, in a Chapter 13 bankruptcy through a process called a cram down. Moreover, depending on your disposable income, nearly all of your dischargeable unsecured debts, such as credit card debt, medical debt, some taxes, etc. may be discharged in a Chapter 13 bankruptcy. And finally, if you are behind on mortgage payments or behind on car payments, a Chapter 13 bankruptcy may allow you to make up the arrearages through your Chapter 13 payment plan to prevent foreclosure or repossession.
Chapter 13 repayment plans range in time from 36 to 60 months, depending on your income level, disposable income, and your particular objectives. A good bankruptcy lawyer will help you formulate the most advantageous repayment plan for your specific circumstances, and you can often receive a free initial bankruptcy consultation. To schedule a free consultation with Hollis Joslin Bankruptcy lawyer, simply Call Hollis 602-354-3890 or Click here to send us a message using the Contact form. Click here for Chapter 13 Bankruptcy rates.