Chapter 13 treats a broader range of your debts than Chapter 7, but you must make payments for a period between three to five to a Court appointed Trustee, who will, in turn, make at least partial payments to your creditors. The amount you repay is often a big discount from what you are required to pay right now.
In return for making this good faith attempt to repay at least part of your debts, bankruptcy law makes significant benefits available:
1) Chapter 13 stops garnishments, harassment, lawsuits, repossessions and foreclosures quickly; and,
2) Keep your home while getting as much as 48 months to make up any back mortgage payments; and,
3) You get up to five years to pay off back taxes, often with no further interest or penalties; and,
4) You can often pay little or nothing on many of your debts, like credit cards, department store accounts, signature loans, and other unsecured loans; and,
5) You get to keep keep your car, furniture, or major appliances and pay for them through your Chapter 13 Plan. You can often pay only what they are presently worth, rather than what you owe on them. (If you owe nothing, of course, you pay nothing).
Basically, if you:
— Own significant amounts of property, and/or,
— Are behind on your mortgage payments, and/or,
— Are behind on car payments, and/or,
— Owe recent taxes, and,
— If you have a source of relatively steady income, and,
— Owe less than certain statutory limits,
Chapter 13 may be what you need.
Why “Wage Earner” Plan?
Chapter 13 are often called “Wage Earner Plans” by tradition. This only means you have to have “regular” income, not necessarily wages. Some have suggested Chapter 13 is not really bankruptcy — but it is. All of the Chapters are subparts of Title 11, the Bankruptcy Code.
All Chapter 13 Plans are not the same. Your monthly payments can vary significantly depending on how carefully your living expenses are calculated and on how carefully your property is valued. We work hard to be sure that your monthly payment is no greater than it should be, within what the law and the Courts allow.