Chapter 13 bankruptcy (a reorganization or “wage earner’s” bankruptcy) is for individuals who earn regular income and can afford a 3 to 5 year repayment plan. A person facing foreclosure often will file a Chapter 13 case to save their home by catching up on mortgage arrears through the repayment plan.
Benefits of filing Chapter 13 bankruptcy.
Stop collections and lawsuits while keeping your assets and paying a portion of your debt over a 3 to 5 year period. The percentage you repay to unsecured creditors (e.g. credit cards, personal loans, medical bills) may range from 5% to 100%, depending on numerous factors. Avoid foreclosure by paying your mortgage arrears over time. Reduce the amount you must pay on your vehicle loan if you owe more than the vehicle is worth, in some circumstances. Discharge the portion of debts not paid through the repayment plan (there are some exceptions, e.g. most student loans, child or spousal support, some taxes).
Qualifying to file for Chapter 13 bankruptcy.
Chapter 13 filers should have reasonably steady income in order to fund a repayment plan. Most Chapter 13 filers choose Chapter 13 when Chapter 7 is unavailable (e.g. income is too high to pass the Chapter 7 “means test”, bankruptcy is needed to prevent foreclosure, assets cannot be protected in Chapter 7, filed a Chapter 7 too recently to file again). Debt limitations in Chapter 13 will affect a small percentage of people seeking to file. There are a number of other factors that also affect whether Chapter 13 is available and a good fit for you, which I can review with you during a consultation.
Cost of filing Chapter 13.
I offer a reasonable and affordable attorney fee for Chapter 13 cases. Unlike in Chapter 7, I can accept a partial payment of fees to file your case, with the remainder of the fees payable through your repayment plan. Once I evaluate your specific situation during a consultation, I will be able to quote you a Chapter 13 bankruptcy fee.
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