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Chapter 13 Bankruptcy

Debt Consolidation

Chapter 13 - Debt Consolidation

A Chapter 13 Bankruptcy is utilized for individuals with regular income who are temporarily unable to pay their debts. Chapter 13 Bankruptcy is not available for businesses.

This type of filing is specifically designed for individuals who desire to pay their debts in installments over a 36 to 60 month period of time. In reality a Chapter 13 filing is a debt consolidation plan, which forces creditors to accept payment from “disposable” income over a period of time. The main reason for filing a Chapter 13 case is to stop action on the following procedures:

foreclosure on real property
repossession of motor vehicles and personal property
salary liens or garnishment
lawsuits or judgment
harassing collection actions (phone calls or letters from creditors)

Upon the filing of a Chapter 13 case individuals are granted “relief” from their creditors. Creditors cannot continue contacting the debtor to demand payment, and they cannot take action to claim money or property from individuals.
Debts of all kinds can be included in a Chapter 13 case including past due amounts for:

• Medical Bills
• Taxes
Student Loans
Child Support
Credit Card Debt
Motor Vehicle Loans
Installment Loans
Mortgage Payments

Ordinarily Chapter 13 filings and payment plans are developed for a period of three to five years. Creditors are paid a percentage of their claim based on the debtors “disposable” income that’s available. This development of a plan will be provided by an attorney which will be tailored to fit your individual situation. An individual may keep their property if it is paid for through the Chapter 13 plan. There are certain situations where a debtor may not have to pay all attorney’s fees in advance, you may be able to pay as part of the payment plan. A Chapter 13 Bankruptcy filing remains on an individuals credit for seven years.

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