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Chapter 13 Bankruptcy

A Brief Overview of Chapter 13 Bankruptcy

Chapter 13 Bankruptcy is also known as a "wage earners" or "reorganization" bankruptcy. This is because Chapter 13 clients will pay back some or all of their debts and will only liquidate if contemplated by the plan and allowed by the Court. 


Most of our clients choose chapter 13 when they have fallen behind on a mortgage; but chapter 13 is also extremely useful for clients who have fallen behind on other secured debts, such as car payments, and priority debts, such as child support and taxes. 


In the case of a mortgage, a chapter 13 client will pay mortgage arrears over a 3 to 5 year term while maintaining ongoing mortgage payments. If a client has owned his car for 910 days or more, he or she may be able to pay the value of the vehicle through the chapter 13 plan rather than the note value. Priority debts, such as child support and taxes, are paid through the chapter 13 plan as well. 


Unsecured debts, such as credit cards, medical bills, pay day loans and collection debts, will be reorganized according to the client's budget and assets, and may be paid nothing at all. As long as the client follows the bankruptcy rules and completes the case, the dischargeable unsecured debts are discharged. This means the creditors are barred from collection efforts by Court Order. Certain debts, such as student loans, taxes and child support, are not dischargeable. 


 *The content contained in this website is for informational purposes only. For advice pertaining to your own circumstances, please contact us for your free consultation.  



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