Chapter 13 Bankruptcy
If you have ever thought you’d be back on sound financial ground if only you could make the world stop until you caught up with your bills, Chapter 13 bankruptcy might be for you. Unlike Chapter 7, which releases people who qualify from most debt, Chapter 13 is a debt reorganization program.
How Chapter 13 Bankruptcy Works
If you have income substantially above what the means test for Chapter 7 bankruptcy allows and want to retain both your home and car and some “nonexempt” assets, Chapter 13 bankruptcy may be able to help you get back on track. What happens with this plan is that you work with your attorney to propose a repayment plan to your creditors. Typically, if you are behind on your house note, you can use this type of bankruptcy to catch up. If you are already working on a mortgage modification plan, any reduced payment you are granted will be worked into your plan.
Once the bankruptcy court approves your plan, you must start making your agreed-upon payments within 30 days. Rather than paying individual creditors directly, you make all your payments to a Chapter 13 Bankruptcy trustee, who will pay them according to the agreement. During the time you are repaying your debt, you cannot take on any new debt without permission of the bankruptcy trustee.
Benefits of Chapter 13 Bankruptcy
While the court must approve your debt restructuring plan, there are many benefits you will receive as a result:
- Once you file, there will be an automatic stay on foreclosure proceedings as you work on a plan to pay past due mortgage payments.
- You may be able to eliminate unsecured second mortgage liens and some debt, such as federal income taxes, that’s not dischargeable in Chapter 7 bankruptcies.
- You can restructure your car loan so you do not lose the vehicle.
- The repayment on any unsecured debts may be lessened, as you will pay no interest over the repayment.
- You can protect your property and any nonexempt assets from liquidation by the bankruptcy court.
- Creditors will immediately stop calling you in an attempt to collect money.
While Chapter 13 bankruptcy doesn’t afford you the same across-the-board debt elimination that Chapter 7 does, it does stop time while your debt is restructured. If you have acquired property and other assets after a lifetime of working hard, Chapter 13 allows you to retain ownership if you have temporarily fallen on hard times.
Put Your Trust In Blanchard Law, P.A.
At Blanchard Law, we will help you develop a successful reorganization plan once you have considered all your options. Bankruptcy is just one remedy that might help you, so we will help you look at your whole financial picture to help you decide the best direction. Depending on your financial goals, the amount and type of debt you have, the assets you want to protect, and the tax and credit considerations, you may decide that other remedies such as debt settlement, foreclosure or short sale, or loan modification are a better alternative.
Life is too short to feel oppressed by debt. By working with Jake C. Blanchard and the team at Blanchard Law, we can help you obtain the timeout you need to reevaluate your finances. For a free Chapter 13 bankruptcy consultation, call us today at (727) 531-7068 or click here to fill out our website form.