Chapter 13 Bankruptcy

Chapter 13 Bankruptcy Overview

Most people file Chapter 13 bankruptcy to protect assets that might not be fully protected in Chapter 7 bankruptcy. The most common reasons people file Chapter 13 are as follows:
To catch up on delinquent mortgage payments or real estate taxes. In Chapter 13, a debtor can pay the delinquent amounts over a period of 36-60 months and protect their property from foreclosure.
To restructure automobile loans with high payments, high interest rates, or payoff balances that exceed the value of the vehicle.
To pay back income taxes, child support arrears, and other priority debts without any additional interest or penalties.
To protect assets that might be subject to auction or sale in Chapter 7. By paying back creditors a percentage of their debt through a Chapter 13 plan, the non-exempt assets are kept permanently beyond the reach of your creditors. The exact repayment amount is determined by a variety of factors, including the value of assets and monthly income.
To obtain a partial discharge of unsecured debts (such as credit cards) when a person's income is too high to qualify for Chapter 7.

Unlike Chapter 7 bankruptcy cases which are generally concluded in approximately 90 days, Chapter 13 plans last anywhere from 36-60 months. While you are in Chapter 13, you will make weekly or monthly payments to a court appointed trustee, who in turn will make payments to creditors on your behalf.

Chapter 13 is a very useful bankruptcy remedy but is suitable for less than one-third of potential bankruptcy clients. This is because Chapter 7 generally allows people to discharge more unsecured debt than Chapter 13, and obviously the goal of bankruptcy is to eliminate as much debt as possible. However, there are some situations where Chapter 7 is simply not the best option to handle debt problems.

Our office files more Chapter 13 cases than any consumer bankruptcy firm in the State. We have solid relationships with all the Chapter 13 trustees in the districts where we practice, and virtually all of the Chapter 13 plans we file are approved by the bankruptcy courts. While it is probably true that a very basic Chapter 7 case can be handled by a competent general practice attorney, Chapter 13 cases should only be handled by a qualified bankruptcy attorney.