What is Chapter 13?

Chapter 13 is a payment plan bankruptcy. Instead of having all the bills eliminated shortly after filing, in Chapter 13 payments are made to a court appointed trustee instead. Most debts that can’t be eliminated in Chapter 7 can be taken care of in a Chapter 13.

How Chapter 13 can help.

Remember Bill's situation from the article about Chapter 7? Bill decides to file Chapter 13. Its stops the IRS, the mortgage company, and the bank, as well as all the other creditors. Bill still has to pay the IRS but it's without any more interest and the penalties have been dropped. Bill resumes making his regular mortgage payments. The missed payments are included in the bankruptcy payment and his house is safe from foreclosure. Bill doesn’t worry whether his car will be taken. It's being paid in the bankruptcy plan. The other bills are also part of the payment plan. They do not have to be paid in full and will be eliminated, just like in a chapter 7 case. Bill’s monthly payment is based on the difference between his income and his living expenses. Overall, his monthly payment is a lot less and he no longer has to worry about losing his house, his car and his business.

What is the right type of case for you?

There are really only two ways to find out. One, learn all the ins and outs of the bankruptcy code, rules of procedure, and court decisions and make a decision on your own. Or, second, sit down with an experienced attorney to review your situation. Call us for a "game plan" meeting. We'll help you review your options whether it's working something out with your creditors or filing a Chapter 7 or Chapter 13.