Chapter 13 Bankruptcy

The second chapter in the Bankruptcy Code applicable to bankruptcies other than Chapter 7 is Chapter 13. If you do not qualify for a Chapter 7 application, your other option is to apply under Chapter 13. Basically, Chapter 13 is an option for you if you have sufficient means to fund a repayment plan.

Chapter 13 of the Bankruptcy Code is different from Chapter 7 in that it provides a way for you to consolidate and restructure your debts and pay it off over a period of three to five years. After paying all your monthly bills, your money is used to pay priority claims such as child support and taxes, secured loans like mortgages and vehicle loans, lawyer’s fees, administrative costs of the case and unsecured claims like credit card bills.

The bankruptcy attorney will determine how much you should pay into the Chapter 13 plan, after calculating your net monthly disposable income. Under the Bankruptcy Code, your entire net disposable income must go towards your Chapter 13 plan. If you are married to a working spouse, his or her income will also be taken into consideration in the calculation.

The court will review the bankruptcy attorney’s calculation of the monthly repayment and if it is approved, you are to make this monthly repayment out of your net monthly disposable income besides complying with any conditions the court might set. You are also obligated to inform your bankruptcy attorney of any changes in your financial situation. Your attorney will ensure that your interests are continually protected.

There are a few advantages in a Chapter 13 bankruptcy, namely it puts a stop to foreclosure or repossession processes on your assets and if there are any un-dischargeable debts under Chapter 7 such as outstanding income taxes, they may be repaid over the period of time set under the terms of the Chapter 13 bankruptcy. In a nutshell, a Chapter 13 bankruptcy is a means to get you out of the strict repayment terms of creditors and put you under more favorable terms. All the debts you owe are directed by the court to be repaid over the three to five years usually without a wage garnishment.

If you want more information about Chapter 13 bankruptcy, please call us at (813) 200 4133 and arrange for a free non-obligatory consultation. You may also fill in our evaluation form to determine your eligibility to apply for a Chapter 13 bankruptcy.