Bankruptcy - Chapter 13

Chapter 13, also known as debt consolidation or reorganization under federal law, is an alternative to Chapter 7 bankruptcy debt elimination. Chapter 13 is not a loan, but rather it is a federal law that may require your creditors to take less money over a longer period of time. Chapter 13 is a powerful tool because it is federal law and backed by the U.S. Federal Court System. Chapter 13 allows you to consolidate debts into one monthly payment that you can afford, while forcing creditors to accept repayment under the federal plan of reorganization. Additionally, most often your legal fees can be paid through your monthly plan payment.

Chapter 13 is designed for an individual debtor who has a regular source of income and has the ability to repay a portion of their debt over time. Chapter 13 is sometimes preferable to Chapter 7 because it enables the debtor to keep valuable assets, even sometimes otherwise nonexempt assets, and because it allows the debtor to propose a "plan" to repay creditors over time – usually three to five years. Chapter 13 is also used by consumer debtors who do not qualify for Chapter 7 relief under the means test. At a confirmation hearing, the court either approves or disapproves the debtor's repayment plan, depending on whether it meets the Bankruptcy Code's requirements for confirmation. Chapter 13 is very different from chapter 7 since the Chapter 13 debtor makes payments to creditors, through the trustee, based on the debtor's anticipated income over the life of the plan. Unlike chapter 7, the debtor does not receive an immediate discharge of debts but rather must first complete the payments required under the plan before the discharge is received. The debtor is protected from lawsuits, garnishments, and other creditor actions while the Chapter 13 plan is in effect. The discharge is also somewhat broader (i.e., more debts are eliminated) under chapter 13 than the discharge under chapter 7.

Call us now at 972-527-4500 to schedule a free appointment with me personally to discuss your options! We are a Designated Debt Relief Agency under Federal Law and we provide legal assistance to consumers and others seeking relief under the United States Bankruptcy Code.