Chapter 13 Bankruptcy: A Repayment Plan
Basically, Chapter 13 Bankruptcy is a Court monitored repayment plan. You keep all of your property and propose a plan to repay all or some of your debts over a 3 to 5 year period. A payment is made each month to a court-appointed trustee. Once the Plan is approved and confirmed by the Court, the trustee then disburses the funds to the creditors who filed claims.
To be eligible for a Chapter 13 Bankruptcy, you must have regular monthly income such from sources such as wages, retirement income, business income (self-employed), rental income, alimony, unemployment compensation, social security, disability, VA benefits. Even family member contributions, if received on a regular basis, is considered income. The income must be sufficient to enable you to make payments under a proposed plan. A prior bankruptcy may limit use of a Chapter 13.
Chapter 13 Bankruptcy is a great choice for individuals who find themselves in any of the following situations:
- behind on their mortgage or car payments
- facing foreclosure or repossession
- have tax debts
- have past due child support or alimony
- have non-exempt assets
- have filed chapter 7 before and a full 8 years has not passed yet
Some benefits of a Chapter 13 are:
- interest stops accruing during the pendency of the bankruptcy
- you may be able to get rid of your second mortgage (in some circumstances)
- you may be able to reduce the lien amount of your vehicle to the present fair market value (in some circumstances)
- and you may be able to reduce the interest rate on your vehicle loan (in some circumstances)
- protects family member or friends that may have co-signed a debt for you
- certain debts that are not dischargeable in a Chapter 7, may be discharged in Chapter 13 if you successfully complete the case.
Filing for Bankruptcy is a complicated process. It involves federal and state law. That is why you should NOT attempt to file a case on your own, nor should you engage the services of a bankruptcy petition preparer. Call the Law Office of Starla J. Hudachek (410) 560-7455 for a free consultation. I will help you determine if Chapter 13 Bankruptcy is the right solution for your financial problems.
