If you have a steady income but find yourself struggling to pay your bills, Chapter 13 bankruptcy may be the answer for you.
Under Chapter 13, you repay your debts over a three- to five-year period. At the end of the payoff time, some or all of your debts may be discharged by the courts.
In Chapter 13 bankruptcy, petitions are filed in federal court that explain your debts, income and assets. Just like in Chapter 7 bankruptcy, a trustee is appointed to your case. However, in Chapter 13, a repayment plan is submitted to the trustee that allow you to spread any past due balances over a three- to five-year period while you continue to pay your current payments on time.
The trustee and your creditors review your submitted plan. Your creditors are permitted to object to the plan, but once it is approved, you keep any property you own and make scheduled payments.
One of the benefits of Chapter 13 bankruptcy is that an automatic stay is issued by the court, forbidding creditors from continuing any collection practices. This includes phone calls, letters and the addition of late fees or interest.
You and your attorney are able to create a repayment plan that keeps you from getting further behind while allowing your creditors to collect a portion of what they are owed. If a creditor ignores the automatic stay, they are in violation of a court order and may face fines. In fact, they may be required to pay you for their violation.
In some cases, unsecured debt may be discharged so that you are no longer obligated to repay it. At the end of your repayment period, the bankruptcy is discharged and you are able to move on with a clean financial slate.
After the discharge, a creditor may report incorrect information to credit reporting agencies. It is important to review your credit report and contact your bankruptcy attorney if you find any information that is incorrect as this may also be viewed as a violation of the court order.
If you or a loved one are stressed over past due bills or are avoiding the telephone because of harassing creditor calls, contact Georgette Miller and Margolis Edelstein today to find out if Chapter 13 is right for you. Arrange for your initial consultation by calling or by filling out our contact form today.
This chapter of the Bankruptcy Code provides for adjustment of debts of an individual with regular income. Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years.