What Is Chapter 13 Bankruptcy?
Good afternoon everybody, Edward Kelly here, bankruptcy attorney. So what are we going to talk about today? Chapter 13. Just finished a series on Chapter 7, and now we’re going to move on to the more involved case, Chapter 13. So in this first video, we’ll just talk about what it is.
So a Chapter 13, simply put, is a personal reorganization. So you may, but don’t necessarily, discharge your debts, but you will, at the least, reorganize your finances, and often you will discharge a debt. So the bare bones are if you do a 13, you and I come up with a plan for you for three to five years, depending on your income, we’ll talk more about that, that says exactly who you’ll pay and what, and it will pay out all of your disposable income, meaning what you can pay. It’s not based at all on what you owe. It may be affected by what you want to keep and how much you have to pay to keep it, meaning collateral. Still, we come up with a plan, we hash it out with the trustee, who is the government official who manages the bankruptcy, and if we can’t agree then it goes to the judge.
That’s very unusual, and hopefully, we get a plan confirmed and then you make your payments, and at the end of it any remaining debt is discharged and everything else is paid off. So again, Chapter 13 is a personal reorganization instead of Chapter 7, which is a liquidation. Debt’s gone, any assets that aren’t exempt are gone, and 90 days later you move on with your life. Chapter 13 is going to last three to five years, it’s going to reorganize your finances and enable you to be out of debt at the end of the plan. So that’s the summary.
What Are the Advantages of Filing for Chapter 13?
If you’re wondering if Chapter 13 is right for you, there are several advantages that you should consider. For one, you can keep your property, including your home, as long as you’re able to make payments according to the plan. Chapter 13 can also protect co-signers of a loan from collection efforts while the case is active. Additionally, Chapter 13 can help you catch up on missed mortgage or car payments, stop foreclosure proceedings, and even lower your monthly payments.
Another advantage is that Chapter 13 can help you reorganize your debts to suit your financial situation. You can prioritize certain debts, such as tax obligations or child support payments, and discharge unsecured debt like credit card balances or medical bills. Chapter 13 can also help you manage secured debt, like car loans or mortgages, by reducing the interest rate and extending the repayment term.
Take the First Step Toward Financial Freedom
If you’re struggling with debt and considering bankruptcy, contact us today for a free consultation. We’ll help you understand your options and determine if Chapter 13 is right for you. Don’t wait any longer to take control of your finances. Call us at(405) 563-7888 to schedule your free consultation now.