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LAW OFFICE OF DAVID CARL HILL

We help familes and individuals regain financial control of their lives

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Chapter 13

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Chapter 13 is often called a debt consolidation or Wage Earner Plan. Essentially a repayment plan is created based upon your budget. It operates somewhat like consumer credit counseling, with several major exceptions.
 
A Chapter 13 Plan is generally binding on creditors, rather than voluntary.  The plan will suspend interest on unsecured debts and may also provide for less than full payment of them.  A Chapter 13 can bind agencies, such as the Department of Licensing and the I.R.S., while the plan is in effect.

A 100% repayment plan can run for as few as several months up to a maximum of 60 months.

A Best Efforts plan can run from 36 to 60 months.

ABest Efforts plan provides for less than full payment to unsecured creditors, but represents your best effort to repay your creditors, even if the unsecured creditors receive virtually noting from the plan. When the plan is completed, these debts are discharged or eliminated, even though nothing was paid on them.

 

There are several reasons to
choose Chapter 13 over Chapter 7.

Prior Chapter 7: A chapter 7 may only be filed once every 8 years. If you filed Chapter 7 less than 8 years ago, your only recourse is a Chapter 13. Even then, you can only get a discharge of your debts if your prior Chapter 7 was filed more than 4 years ago.

Non-dischargeable Debts: If your most troublesome debts are non-dischargeable debts, Chapter 13 may be the best alternative. Some of these debts include:Back Taxes,  Student loans, Back child support, Court fines, and Criminal restitution.  Certain other debts may fall into this category.

At-Risk Property: If you have property that cannot be exempted or protected under the bankruptcy rules, you may choose Chapter 13 as a means of protecting the items. The creditors must receive as much from the Chapter 13 plan as they would receive if you were forced to sell the property under Chapter 7. The most common at-risk property is foreclosure pending property. Chapter 13 can stop a pending foreclosure or repossession by providing that the back payments can be cured within a reasonable time during the life of the plan.

Excess Income: If you have excess income, after deducting you ordinary living expenses, you may choose to repay all or part of your debts with a Chapter 13.  If your average income for the previous six months exceeds the average for you size family, you may be required to file a 60 month Chapter 13

Questions about Bankruptcy?
Email me at bankruptcy@hilllaw.com

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