WHAT IS A CHAPTER 13 BANKRUPTCY?
A Chapter 13 is a “wage-earners” bankruptcy. When you file a Chapter 13 bankruptcy, you submit a plan to repay your debts over a three to five year period. The bankruptcy laws determine how much you will pay based on your income and expenses. At the end of the three to five year period, generally, all remaining unsecured debts will be discharged. Chapter 13 can save your home from foreclosure. In addition, Chapter 13 bankruptcy is an option when your income is too high to qualify for a Chapter 7 bankruptcy or when you have significant assets you would lose by filing a Chapter 7 bankruptcy. Chapter 13 can also be an effective way to pay tax debt without incurring additional interest and penalties.
WHO DO I HAVE TO PAY BACK IN A CHAPTER 13?
Secured Creditors: Oftentimes, you will continue to make your regularly scheduled payments for assets you want to keep (such as your home or car) during the Chapter 13 case. And, you will have the opportunity to cure arrearages or catch up on your late payments on your secured debts over the life of your Chapter 13 case.
Unsecured Creditors: Unsecured debts such as credit card bills, hospital bills and, in some cases, unsecured second or third mortgages may be paid back at just pennies on the dollar. In addition, Chapter 13 can be a smart strategy for handling amounts due to the IRS or other taxing authorities, since it allows you to repay many tax debts at 0% interest over the life of the plan without incurring additional late fees or penalties.
Please understand that all cases present a unique set of facts. The above is intended only as a general overview of the law and may not apply to your particular situation. We invite you to speak with one of our attorneys in order to get a complete assessment of your case. To contact us, please call (757) 961-3900 or send an email to email@example.com and let us explain the debt relief options available to you.
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Wilson & McIntyre represents consumer debtors in filing for bankruptcy relief under the United States Bankruptcy Code. As such, Wilson & McIntyre is a debt relief agency as defined in the Code.