Chapter 13 Bankruptcy

Often referred to as a “reorganization” bankruptcy

Chapter 13 Bankruptcy is best suited for individuals who have a steady income and property that they may want to hang on to. Under a Chapter 13 bankruptcy, you will be able to keep your property, but will have to prepare a payment plan to repay all or some of your debts within a 3 to 5 year period. Essentially, you will be reorganizing your debt into debts that will be paid and debts that will be discharged. In exchange for paying some of your debts, there are some important benefits the Bankruptcy Code provides to you, which makes this a very important bankruptcy. A Chapter 13 can sometimes allow you to reduce what you pay for your car, reduce your interest rates on your car, reduce some tax liabilities, including tax penalties, and at times it will allow you to remove a second mortgage from your residence.

In order to qualify for Chapter 13 Bankruptcy, you must prove that you can meet the financial obligations of making payments on your debt. Chapter 13 provides you some control in the payment plan and provides a second chance for keeping your home, paying off your taxes and keeping your car. A lot of the time you will be able to walk away from most if not all of your unsecured debts, such as credit cards and be able to create a payment plan with your attorney based on what you can afford.

Before filing for Chapter 13 bankruptcy, you will be required to receive credit counseling from an approved agency by the United States Trustee’s office. You will also be required to pay a filing fee.

When you are finished with your payment plan, any and all remaining unsecured debts that are eligible for discharge will be cleared.