Chapter 13 Bankruptcy
Chapter 13 is a type of debt relief which is often referred to as the “Wage Earner Plan.” It is specifically designed for people who earn a wage or otherwise receive monthly income, including social security, unemployment, disability, but currently do not earn a high enough income to pay all of their debt. Chapter 13 allows you to structure a plan to repay some or all of the debt owed to your creditors over a period of up to five (5) years while generally allowing you to retain all of your assets. Upon the completion of your chapter 13 plan, you would received a discharge that would eliminate any remaining unsecured debt.
Some of the typical reasons for filing a Chapter 13 bankruptcy include: (1) to catch up mortgages on houses and cars; to pay taxes and to stop tax garnishments that were not dischargeable in Chapter 7; (2) to protect co-debtor; to keep excess equity in property above and beyond their exemptions; and (3) to pay debt over time and under protection of the court that otherwise would not have been dischargeable in a Chapter 7.
Filing for Chapter 13 can stop foreclosure processes and provide the homeowner an opportunity to bring current the amount owed over a specified time period. It can also stop vehicle and mobile home repossessions and may provide an opportunity to restructure the obligation. It can provide relief from: (1) student loan collection actions; (2) creditors seeking to collect past due domestic support obligations; and (3) actions from taxing authorities attempting to collection past due taxes.
Chapter 13 Bankruptcy may allow for: (1) the stripping off of fully unsecured junior mortgages on residential real property; (2) the impairment and discharge of non- support marital obligations; (3) the impairment and discharge of unsecured debts; and (4) the retention of all assets as a matter of law, although many plans require the liquidation of assets as a matter of choice or necessity.