There are two main chapters of bankruptcy that individuals file: Chapter 7 bankruptcy and Chapter 13 bankruptcy. Which chapter is right for you is specific to your situation. For an overview of the primary differences between the chapters, read our article The Differences Between Chapter 7 and Chapter 13 Bankruptcy.
Chapter 13 Repayment Plan
Chapter 13 bankruptcy creates a repayment plan that lasts three to five years, depending on your specific situation. This means that a Chapter 13 debtor will be in bankruptcy for the length of the plan payments. In general, debtors who have income that falls below the median income for our state, adjusted for household size, will have a three year plan. Debtors who have income above the state median, adjusted for household size, will have a five year plan.
The Chapter 13 bankruptcy plan must be approved by the Bankruptcy Trustee and the Bankruptcy Court. It requires monthly payments to the Bankruptcy Trustee for the duration of the plan. The Trustee then makes pro-rata payments to your creditors who are supposed to be paid through the plan.
To qualify for Chapter 13, you must have a steady source of income, such as from a job, self-employment, a business, retirement income, or social security.
Amount of the Plan Payments
Chapter 13 plans vary greatly depending on the specifics of the case. Some plans pay back 100% of debts owed, while others pay nothing or only a percentage to general unsecured creditors (credit cards, medical debts).
The amount of your plan payment is determined by the proper calculation of your disposable income, the total of your priority debts (those that must be paid back through the plan), and any value you may have in non-exempt assets. Chapter 13 plans are complex and case specific. Please feel free to meet with us for a free consultation so that together we can review your situation and determine what your monthly plan payment may be.
Benefits of Chapter 13
Some of the Chapter 13 benefits include:
- Stops foreclosure, vehicle repossession, wage garnishments, stops lawsuits filed by creditors, and stops harassing creditor phone calls.
- At the conclusion of the Bankruptcy, remaining credit card debt, medical bills, or other unsecured debts, and some tax debts, are discharged (erased).
- Stops all collection action.
- Can stop foreclosure and allow a homeowner to catch up on mortgage arrears.
- In some cases, allows a homeowner to “lien strip” or eliminate a second mortgage.
- Creates an opportunity to catch up on missed car payments.
- Creates an opportunity to catch up on other missed payments, such as back taxes or child support payments.
We are here to help you understand the process and decide if filing for relief under Chapter 13 is the right choice for you and your family. Contact us today (912) 351-9000 to schedule a free consultation.
The Law Offices of Barbara B. Braziel proudly serves Savannah, Richmond Hill, Hinesville, Pooler, Port Wentworth, Tybee Island, Clyo, Ellabel, Midway, Ludowici, Springfield, Pembroke, Brooklet, and Garden City, GA.
We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.