Chapter 13 bankruptcy helps consumers restructure their debt with a 3 to 5 year repayment plan. Chapter 7 bankruptcy may seem like the best chapter to file when seeking debt relief by getting debt eliminated or discharged. But debt relief can also be obtained in Chapter 13, even though the process is more complex than Chapter 7. Debt relief in Chapter 13 gives the consumer multiple advantages.
The following questions are commonly asked by consumers considering Chapter 13 bankruptcy:
How much will I pay each month with the repayment plan?
Payments made to your creditor depend on your ability. Chapter 13 requires priority debts to be paid first, such as back taxes or support obligations (child or spousal). Your payment plan will also include making payments to creditors that will allow you to keep personal property such as your home or vehicle. Disposable income (funds you have left over after making necessary payments) are paid toward unsecured debt.
Do I have to give up or lose property?
No. Chapter 13 has laws and exemptions in place that allow you to retain your property. Keep in mind, if your property is in excess of the exemptions allowed, you could be required to use the excess to pay a certain amount to unsecured creditors during the repayment period.
Can I keep my house during foreclosure?
Chapter 13 can help you keep your home by helping you make mortgage payments missed. Chapter 13 can also help consumers with unsecured second & third mortgages and those with a lien on their home from a judgment or unpaid taxes.
What happens if I'm unable to continue making payments?
If your income changes you should contact your attorney or trustee. You plan may be modified to make smaller payments or obtain a discharge. You could also increase your payments if your income increases.
Chapter 13 can also help you keep your vehicle, especially if you owe more than what it is worth by reducing the amount of the loan to fair market value. An experienced Dallas bankruptcy attorney can explain how bankruptcy can help you reorganize financial obligations to help you get the relief you need to move forward.