Chapter 13

Chapter 13 Bankruptcy Overview

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. Chapter 13 is the main type of consumer reorganization bankruptcy used. Chapter 11 can be used as a consumer reorganization bankruptcy, but typically, Chapter 11 is only selected as a consumer reorganization if a client does not meet the qualifications for a Chapter 12 or Chapter 13. Chapter 12 Bankruptcy is a consumer reorganization bankruptcy for family farmers or family fisherman. 

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 or her 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 owed as of the petition, such as child support and taxes, are paid through the chapter 13 plan as well. In the case of the secured and priority debts, chapter 13 allows clients to reorganize the arrears and pay them over time, a 3 to 5-year term, rather than in a lump sum. 
 
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. Chapter 13 gives clients a fresh start because clients exiting a chapter 13 will emerge with reorganized debts. Mortgage payments and vehicle payments that were in arrears when the case began are now current and the dischargeable debts are non-collectable. The client can now move forward financially.  For more information, see our Chapter 13 ebook and slideshow.

Contact us for your free consultation

8 + 10 =

Phone

Phone: 214-696-9601

 

Address

10,000 North Central Expressway

Suite 400

Dallas, Texas 75231

Price and Price Law, Bankruptcy Attorneys in Dallas, Texas

Download our Bankruptcy eBook

Q