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What is Chapter 13 Bankruptcy?

Chapter 13 Bankruptcy

Many people like to refer to Chapter 13 bankruptcy as the “catch your breath” provision of the Bankruptcy Code. It is designed for people who have money to pay back their creditors but who can’t do it all tomorrow like the creditors are demanding.  Chapter 13 bankruptcy allows you stop the harassing phone calls and lawsuits.  Bankruptcy Chapter 13 gives you time to catch your breath while you pay your creditors. Chapter 13 bankruptcy stops garnishments, foreclosures, as well as repossessions of your car. You do not need the permission of your creditors to obtain Chapter 13 bankruptcy protection.

How Chapter 13 Works

The first step is to make a list of all of your debts. When you come to my office, I am going to review your income and create a budget for you. Then, we can propose a monthly payment that you can afford. You pay this new amount to the trustee each month and it covers all of your consumer debt. This one amount covers all credit card debt, medical bills, finance companies, and car notes. Sometimes, we can even include IRS tax debt in this total. Chapter 13 allows you to catch up on back mortgage payments and stops the interest and penalties on back taxes.

Your Chapter 13 bankruptcy plan bars credit card companies and all other unsecured creditors from collecting interest. If you owe $10,000 in credit card and have an interest rate of 25 percent, you can save $2,500 per year in just credit card interest alone. However, I will tell you if Chapter 13 bankruptcy is not a good option for you. I receive many referrals from my clients because they know I shoot straight with them.

How much you pay each month depends on what you can afford, not what the creditors demand. Depending on your income and budget we may be able to wipe out all unsecured debt in your Chapter 13 bankruptcy plan.

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Some bankruptcy attorneys will advertise chapter 13 as bill consolidation.  Personally, I don’t think this type of advertising is completely honest.  Chapter 13 works like a bill consolidation but there is no loan.  Chapter 13 protects you from the collection efforts of your creditors while you pay them back over the life of your plan.

To start your new lease on life, consult an experienced bankruptcy attorney in Rome from the Law Office of Jeff Kelly. Convenient payment plans are available.

Other posts that may interest you:

1. What is Chapter 7?

2. How much does it cost to file?

3. How do I stop a garnishment?

4. How do I stop a foreclosure?

5. Can I convert my chapter 13 to a 7?

6.  What happens in a chapter 13 after my 401k loan is paid off?

DISCLAIMER : The information contained on this page is for information only. It is not intended to be legal advice, nor should you make legal decisions based on this information. Please consult with me to see how the law applies to your particular situation. We are a debt relief agency. We help people obtain relief from their creditors by helping people file bankruptcy.

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