Chapter 13 Bankruptcy
What is Chapter 13?
Chapter 13 bankruptcy, often called "wage-earners bankruptcy",
provides a person with a way to achieve a new start, but requires the
filer to pay off some of their outstanding debts. Under the terms of Chapter
13 bankruptcy, your unsecured debts are combined into one category and
a payment plan is developed based on calculations of your disposable income.
You will still have enough of your income to pay your living expenses,
such as house payment, car payment, and utility bills, but the largest
part of your income above those expenses will be used to pay off your
unsecured creditors over a 3 to 5 year period. Once the agreed payments
have all been made, you will receive a discharge for your debts that were
included in the bankruptcy, whether or not the payments satisfied the
Filing a Chapter 13 bankruptcy requires you to submit a detailed budget
to the court and the trustee. It may take time for you to compile all
the records necessary to file a Chapter 13 case. Your Price Law Group
bankruptcy attorney will help you evaluate your financial situation and prepare your
case for court.
When you file your case, you must begin making payments to the Chapter
13 trustee who will oversee the payment of your debts in the bankruptcy
case. If you wish, most trustees will allow you to set up an automatic
draft so that payments can be made from your bank account automatically.
Typically debts that you owe to the government are not dischargeable, but
including them in your Chapter 13 plan can have many benefits. Chapter
13 bankruptcy freezes interest and penalties on taxes. This will allow
your payments to go directly to the principle, greatly reducing your interest
and penalty burden. Chapter 13 will stop the government from adding more
penalties and interest to your back taxes.
What is a Cramdown in Chapter 13?
debt can be extremely overwhelming, and in some cases, it may appear that there
is no way to get out of the pit. Chapter 13 bankruptcy specifically is
considered to be a debt reorganization rather than elimination like
Chapter 7. In some cases, you may have an investment property in which your principal
balance of debt (the mortgage you owe) is actually higher than the value
of the home itself. In this case, chapter 13 bankruptcies allow the opportunity
of what is called a "cramdown" in order to help you reduce that
principal payment. Unfortunately, only specific forms of secured debt
can be used for a cramdown. What makes your debt secured is that there
is a security interest by your lender in the property allowing them the
power to repossess in the event that you are unable to make your payments.
This can include your car payments, investment properties as well as various
forms of personal properties as well.
Call a Bankruptcy Law Attorney Today (866) 210-1700
The process of a cram down can be complicating and for this reason, hiring
a trusted bankruptcy attorney in your area is absolutely essential. For
more information on the protections available under Chapter 13 bankruptcy,
schedule your appointment for a
free initial consultation with Price Law Group.
For more information call us at 866-210-1722 or fill out the form below.