Practice Areas

Chapter 13

A Chapter 13 Bankruptcy is often referred to as a wage earner's plan or a repayment plan.  Under a Chapter 13 Bankruptcy, an individual proposes a three to five year plan to restructure their debt.  At the end of the plan, the individual receives a discharge of their debts with a few exceptions.  The most common exceptions are student loans, child support, spousal support, and debts related to bad behavior of the individual (fraud, criminal activity, embezzlement, intentional harms, etc.).  

The most powerful aspect of a Chapter 13 is the ability to immediately stop a foreclosure proceeding or scheduled foreclosure sale.  Through a Chapter 13, an individual whom is behind on their mortgage or car payment can simply add in the amount they are behind ("arrange") and repay the amount over a three to five year period.  In addition, an individual can recover a vehicle or other piece of personal property that has been repossessed by a secured creditor through a Chapter 13.  If a vehicle loan is more than two and a half years old, an individual can simply repay the secured creditor the amount he vehicle is worth instead of the amount owed, at an interest rate of prime plus one to three percent.  

The Chapter 13 Plan Payment is simply determined by the difference between the income and expenses you report to the court.  Therefore, it is virtually impossible for a Chapter 13 Plan payment to be too high or unaffordable.  A common misconception is an individual has to pay back a certain percentage or one hundred percent of their unsecured debt.  This is untrue.  As long as the equity in an individual's assets does not exceed the allowable amounts, an individual does not have to repay any of their unsecured debt or any of the debt on any secured loan in which the individual surrenders the property to the creditor.  Instead, the amount required to be paid back is simply determined by your budget or the amount you can afford to pay as a Chapter 13 Plan Payment.  

 Contact the bankruptcy attorneys at O'Hara, Taylor, Sloan & Cassidy to learn more about Chapter 13 bankruptcy.

 

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.