Chapter 13 Bankruptcy Explained
Chapter 13 Bankruptcy is a payment plan set up to consolidate your debt. Also known as debt restructuring, Chapter 13 allows those who are eligible to use income to gradually eliminate debt while still holding on to their home and their vehicles. The repayment plan allows you, the debtor, to catch up on house and car payments in manageable monthly amounts.
Chapter 13 puts you in control rather than mortgage lenders and other creditors. While the process often takes anywhere between three and five years to complete, the most important thing to remember is that filing for Chapter 13 allows you to pay off your creditors while still holding on to your home and vehicles.
Property & Chapter 13 Bankruptcy
You, the debtor, will not lose any of your property unless you choose to let the property go or cannot afford the modified repayment plan we establish for you. Chapter 13 is the only consumer type of bankruptcy that allows you to keep your home and/or car even if you are behind on the payments. Chapter 13 bankruptcy consolidates any payment arrearages into your bankruptcy repayment plan.
The Cost of Chapter 13 Bankruptcy
During a Chapter 13 bankruptcy proceeding, attorney fees often DO NOT have to be paid up front. Instead, any and all fees are paid through your bankruptcy plan. However, if you are self-employed or opt not to have your employer deduct your bankruptcy payment from your wages and send it to the bankruptcy court, you may be asked to pay a small retainer in order to begin your case.
The Benefits of Chapter 13 Bankruptcy
While you are in Chapter 13 bankruptcy, your creditors can no longer pursue any action against you regarding repayment of debts. That means no one can call and harass you, sue you or seize any of your property as long as you are in Chapter 13 bankruptcy and are making your modified debt payments to the bankruptcy court. When you finish the Chapter 13 repayment plan, you will be eligible for a chapter 13 discharge of those debts. This means that you are no longer liable for any and all dischargeable debts.
In other words, you will be free of unsecured debts and vehicle loan payments. You will be current on your mortgage loan. You will resume making regular monthly mortgage payments directly to the mortgage lender and will not be in fear of foreclosure so long as you resume your regular payments. However, child support alimony, student loans and criminal restitution are not bankruptable debts and you will still owe the outstanding balance even after the Chapter 13 proceeding has been finalized.
Going to Court
Usually, you will attend one hearing known as a Meeting of Creditors. This hearing takes place approximately 45 days after you file and your Chapter 13 trustee will swear you in and ask you questions. Our office will prepare you for that hearing after you’ve signed any and all bankruptcy paperwork.