Chapter 13 is an alternative to Chapter 7, and is designed for people with a regular income, who want to pay off their debts, but need a certain amount of time to do so. In Chapter 13, debtors repay their creditors either in full or in part, over a period of three to five years. A Chapter 13 financial reorganization plan can accomplish the following:
- Stops foreclosure
- Consolidates your bills
- Lowers your total monthly payments to an affordable level
- Stops the interest on most of the debts
- Allows you time to repay your creditors
A Chapter 13 bankruptcy offers flexibility. It is a comprehensive debt reorganization and debt restructuring that results in an affordable monthly payment.
A Chapter 13 bankruptcy requires that you have some source of regular and reliable income, and it's ideal for people in these situations:
- You're behind on your mortgage – the plan will help you get caught up
- Your second mortgage that is underwater – the second mortgage can be removed entirely!
- You have unpaid property taxes – the plan will help you get caught up in affordable monthly payments
- You have unpaid back income taxes – you can pay back the IRS over time at zero interest
- You're behind on your car payment – the plan can lower your interest rate and stretch out the loan to lower your payment
- You have regular income, but you simply cannot meet all of your obligations every month – the plan can help you budget
- You have assets you want to protect – a Chapter 13 bankruptcy will allow you to keep your assets and pay back your creditors over time.
- You have certain kinds of debt that are not dischargeable in a Chapter 7 – some kinds of debt, such as civil infraction traffic tickets, are not dischargeable in a Chapter 7 bankruptcy but are dischargeable in a Chapter 13 bankruptcy
In a Chapter 13 bankruptcy, you will still enjoy:
- Automatic stay from your creditors the entire time you are in your plan
- Immediate stops to foreclosures, garnishments, and repossessions when your case is filed
A bankruptcy attorney can review your income, assets, and debts and help you determine whether a Chapter 13 bankruptcy might be right for you.