Chapter 13

Debt Restructuring & Modification

For the individual who has a somewhat predictable monthly income, Chapter 13 can be preferable to chapter 7 bankruptcy. In fact, many individuals who attempt to file for chapter 7 end up finding out, by way of a means test, that they do not qualify for total debt dismissal. This chapter is often referred to as the "wage earner's bankruptcy" as the filer makes a monthly payment to the bankruptcy trustee on the total unsecured debt for three to five years. The amount of the payment is determined by the amount of disposable income (the amount of income you have left after deducting your basic expenses). Unpaid balances remaining after the payment plan is completed will be discharged and you will be free of those obligations. If you are burdened with wage garnishments, stressed by creditor misconduct, or need to know more about foreclosure prevention, consult our firm.

While there is a guarantee that some of your assets will be liquidated under Chapter 7, Chapter 13 offers individuals enough support to allow even for keeping their homes. Even those who are currently going through the process of foreclosure can file for bankruptcy, stop the process, and get their mortgage loan restructured to a more manageable amount. Adjusting of your debts can also benefit those who have helped co-sign on your loans by way of a provision that deals with consumer debts. Undoubtedly one of the best things an individual can hear after choosing to file Chapter 13 is that creditors are not allowed to contact them. Those who file under this chapter will make all of their payments to someone called a trustee. This trustee is the one who will then be responsible for distributing the money to all of the creditors.

In a chapter 13 bankruptcy, it is important that you put together a list of all your obligations, including all possible future obligations. Making certain that this information includes everything and working out a monthly budget may take some time, but is well worth the investment of effort and can help you avoid difficulties down the road. Your attorney will guide you through the process ensure you avoid costly errors. Once your case has been filed, interest accrual on monies owed and all collection actions will stop. Your first payment to the trustee will be due approximately 30 days from the date of your filing. The bankruptcy trustee will oversee the payment of your creditors.

Debts You Can’t Discharge

Most debts to the government are not included in the bankruptcy estate. Spousal support, child support, taxes and some court judgments are also exempt. Chapter 13 stops interest and penalties on taxes which allows your payments to be applied to the principal so you can reduce your financial burden. A bankruptcy lawyer at Price Law Group can explain the protections afforded by Chapter 13 as well as strategies which can be used in tax resolution, loan modification and credit repair.