Chapter 13 Bankruptcy
Why consider chapter 13?
- If you have fallen months behind on your mortgage and fear foreclosure
- If you have fallen months behind on your vehicle(s) and fear repossession
- If you don’t qualify for a Chapter 7
- If you owe taxes over the last 3 years
Chapter 13 Formula
Chapter 13 is a three (3) to five (5) year payment plan. During these thirty six (36) to sixty (60) months you pay what is deemed an affordable amount. There is a formula that determines ‘affordable’ :
- Monthly income of the individual(s)
- Monthly expenses of the individual(s)
- Amount & nature of debts
- Means Test
- Disposable Income
Benefits of Chapter 13
Chapter 13 helps you reorganize your debts so that you can keep your home, your cars, all of your secured debt (if you choose) and reduce your unsecured debt. Filing Chapter 13 will stop the creditor harassment at home, at work, stop calls to family & friends; stops lawsuits, stops threats of lawsuits, stops repossessions and stops foreclosures.
Chapter 13 Downside
Chapter 13 is a debt repayment plan. Percentage of successful Chapter 13′s is not as high as one might hope (completing all the plan payments). This financial commitment requires that your earnings remain the same and that you not experience any challenges that affect your income – IE: divorce, illness, loss of job. If this should occur contact your bankruptcy attorney to see if you can get your plan payments modified or put on hold temporarily. Don’t procrastinate. Bankruptcy is serious business and Chapter 13 requires serious consideration.