A Chapter 13 Bankruptcy is a reorganization or wage earner’s plan that allows debtors to restructure some or all of their debts into a monthly payment over a 3-5 year period of time. A Chapter 13 Bankruptcy has very powerful tools that can allow a debtor to gain immediate relief while paying back creditors a fair amount. A Chapter 13 can be filed with no money down as long as the debtor is employed.
The Chapter 13 Bankruptcy Plan
The key element of a Chapter 13 Bankruptcy is the plan. The plan is a document that states:
- What creditors are paid pay back
- How much creditors are paid
- How long the plan will run
The Chapter 13 Plan is very flexible and can allow a debtor to pay back taxes, child support, court fines/fees, car loan and mortgage arrears over a 3-5 year plan.
How Long Does a Plan Last?
A debtor who is below median is required to be in a Chapter 13 Bankruptcy for a minimum of 36 months, but a maximum of 60 months or 5 years. In these cases, the length of the case is usually determined by how much the plan payment is. A shorter case will have a higher monthly payment, so some debtors prefer a case longer than 36 months to allow them some flexibility in their budget.
A debtor who is above median is required to be in a Chapter 13 Bankruptcy for 60 months. An above median is someone who makes over a certain amount of money and is therefore presumed to be able to pay back general unsecured creditors like credit cards and medical bills.
Advantages of Chapter 13 Bankruptcy:
- Taxes are paid back at 0% interest
- Student loans are in deferment while in Chapter 13 Bankruptcy
- Reinstate your drivers license and pay back court fines/fees
- Stop mortgage foreclosure and pay back arrears
- Lower your interest rate on car loans and title loans to 5%
- NO FEES UP FRONT
What about Chapter 7 Bankruptcy?
For a brief overview of the differences between Chapter 7 vs 13 Bankruptcy, click HERE. There are several advantages and disadvantages to both.
Chapter 13 Bankruptcy Discharge
Once the debtor has finished making all the monthly plan payments, the case is complete and the Judge will sign an order of discharge. To understand the different types of debts and what gets discharged in a bankruptcy, click HERE.
If you have questions about Chapter 13 Bankruptcy, please give us a call at email us now.for a FREE Consultation over the phone or in person or you can