Chapter 13 Bankruptcy

A Chapter 13 bankruptcy is more of a repayment plan. Unlike a plan through a Debt Consolidation company, this does not necessarily mean that you have to pay back 100% of the debt. Instead, Mike will help you propose a payment plan to the court based upon your income and expenses. These payment plans last either 3 or 5 years, depending on your situation. Under the plan, the court consolidates all of your unsecured debt, and you agree to pay 1 payment each month to the Trustee. The Trustee then distributes your payment among your creditors. At the end of the plan, whatever is left due and owing on your unsecured debt is discharged. In a Chapter 13, you can also bring your back mortgage payments current, make payments on student loans, cars, and tax debt. In Chapter 13, there is also a mechanism to “cramdown” (i.e., separate the secured non-dischargable debt from the unsecured dischargable debt) on assets that are worth less than the debt owed against them, subject to some limitations. Like a Chapter 7, a Chapter 13 petition also triggers the automatic stay. Call Mike for a free consultation to determine what chapter of bankruptcy, or another solution, best meets your needs.