Chapter 13 Bankruptcy is best defined as the reorganization of your debts supervised by the federal bankruptcy court. The goal of a Chapter 13 bankruptcy is to enable income earning debtors to rehabilitate provided they fulfill a court approved repayment plan.
A Trustee supervised by the US Department of Justice will be appointed to each case. The Trustee will receive monthly payments from the Debtors and distribute the funds to creditors pursuant to the repayment plan. They also review each plan to ensure they terms are fair to your creditors. Debtors can expect to be in a Chapter 13 bankruptcy anywhere between 3 and 5 years. This is similar to debt consolidation, except you are provided protection from your creditors from the bankruptcy laws. A specific formula us used to determine how much of your unsecured debts (credit cards, medical bills, ect.) will need to be repaid through the plan. After successful completion of your Chapter 13 bankruptcy, the allowable portion will be discharged. Student loans and child support are not dischargeable debts. A Chapter 13 is completely voluntary and can be dismissed if your circumstances drastically change.
The Chapter 13 bankruptcy laws provide some great tools for debtors. Clients keep all their property in a Chapter 13. Many clients facing foreclosure turn to Chapter 13 to stop foreclosure and get current on their mortgage. They can even eliminate their second mortgage in many instances, thus eliminating negative equity. Debtors may be able to lower their car payments in some unique situations. Many Debtors also file a Chapter 13 bankruptcy to address tax debt & liens, these amounts may be reduced in many situations. A Chapter 13 is often the best option to address debts assigned to you in a divorce order.
Chapter 13 Bankruptcies are often complex in nature. It’s recommended to seek the guidance of an attorney experienced in Chapter 13 specifically to ensure you the full benefit of the Bankruptcy laws and to have the best chance at receiving a court approved repayment plan. The Law Office of Christopher German, focuses on Chapter 13 work. We have handled hundreds of Chapter 13 cases with a wide range of circumstances. Contact us to schedule a free consultation to see if Chapter 13 is right for you.
This content is simply an overview of what a Colorado Chapter 13 Bankruptcy is. Each case is unique and needs to be reviewed by your bankruptcy attorney. If you are interested in learning more about the different bankruptcy chapters watch this video. This is a brief review of the three main types of bankruptcy chapters for individuals – chapters 7, 11, and 13. The most common type of bankruptcy which is chapter 7, which are liquidating bankruptcy, and chapter 13 , used by individuals who want to catch up on past due mortgage payments or car loan payments and keep their assets.
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