CHAPTER 13 BANKRUPTCY

Many people use Chapter 13 to save their homes from foreclosure or their cars from repossession.  If you are behind on your mortgage and car payments, Chapter 13 can stop a foreclosure or repossession.  Under Chapter 13 of the Bankruptcy Code, you may pay your creditors in installments over a period as long as five years.  If you have net monthly income in excess of the state median family income, the plan must provide for a five-year payment period. You must make these payments out of your future income directly to the Chapter 13 trustee, who will then disburse the money to your creditors entitled to receive it under the plan. If you comply with the provisions of the plan, you may retain most, if not all, of your property and will be granted a discharge of most of your indebtedness. 

Chapter 13 Bankruptcy is similar to debt consolidation (oftentimes offered by "non-profit" entities) except under Chapter 13, your plan has real teeth, so to speak.  Using a debt consolidation company, if your creditor refuses to reduce or negotiate a debt, there is no real recourse.  Your interest still accrues and your total debt may keep growing.  Under Chapter 13, the Bankruptcy Court approves a new interest-free plan for repayment.

In the end, if you comply with the terms of the plan, you are relieved from liability for the remainder of your dischargeable debts.  Whether Chapter 13 makes sense for you or not requires careful consideration with the help of a skilled bankruptcy attorney.  For a free evaluation of your case, please contact us.