Chapter 13 Bankruptcy

In Chapter 13, you file a plan to pay off some of your debts over several years. Chapter 13 allows you to keep property with significant equity — especially your home and car — if you can make the payments.

Chapter 13 bankruptcy is sometimes called a “wage earners plan” or “repayment plan”. Certain debts must be paid – typically, secured debts, if you want to keep the collateral and taxes. In Chapter 13, Debtors may also be required to pay back their other creditors (unsecured debts such as credit cards, medical bills, payday loans, etc.) based on what they can afford to pay over the course of 3 to 5 years. Often, amounts paid back are less than the full amount owed. The tests in a Chapter 13 bankruptcy are similar to the tests listed above in a Chapter 7 bankruptcy. However, in a Chapter 13 bankruptcy, instead of showing that the person filing bankruptcy cannot afford to pay anything, the test shows how much a person can afford after deductions for reasonable and necessary expenses. This means that the Court will look at your income, less what you need to live, and set a payment that you can afford. Chapter 13 bankruptcy also has some additional benefits:

• Chapter 13 bankruptcy can allow you to modify the terms of your secured contracts. You can often significantly reduce your interest rate on a car, which can save you thousands of dollars. If you are behind on your car payment, Chapter 13 bankruptcy allows you to keep your car without concerns of repossession.
• Chapter 13 bankruptcy allows you “cure” your mortgage arrears over the course of 3 to 5 years, while maintaining your current mortgage payment. If you are behind on mortgage payments, a Chapter 13 bankruptcy allows you to get your mortgage current without the concern of foreclosure.
• Chapter 13 bankruptcy will also allow you to repay taxes without incurring additional interest or penalties.

At Skinner Law, LLC an experienced bankruptcy attorney will take the mystery out of bankruptcy, debunk the common myths, and can help you determine whether it’s the best solution to your short- and long-term financial goals.

You should consider filing Chapter 13 if you:

• Are in danger of losing your home, but can make future payments
• Are behind on mortgage payments, but can catch up if given some time
• Are behind on your car payments and are in danger of the vehicle being repossessed, but can make future payments.
• Have valuable property, which is not exempt, and can afford to pay Chapter 13 plan payments.

You must have enough income to pay for your necessities and make the required payments as they come due. Call us at 913-839-3073 to schedule a free consultation with a bankruptcy attorney.

Filing for Chapter 13 triggers an automatic stay, which stops collection activities against you during the pendency of your bankruptcy case. In particular, the automatic stay will stop creditor calls and prevent creditors from garnishing wages, filing liens, foreclosing on liens and repossessing collateral or property.