Chapter 13 - Is it Right for You?
Chapter 13 is sometimes called "debtor's court." In Chapter 13, you make a regular payment to the Chapter 13 trustee who then distributes money to your creditors on a monthly basis.
Chapter 13 offers debtors many advantages including:
● In Chapter 13 you generally do not have to be concerned about losing any of your property.
● Chapter 13 allows you to cure arrearages owed on your home or cars. You must still make your regular payment each month but Chapter 13 gives you a way to pay the amount you are behind over a period of time.
● As with Chapter 7, the filing of a Chapter 13 case will stop your creditors from harassing you. You will finally be able to stop worrying about the phone ringing. It will also immediately stop all lawsuits and garnishments.
● In some circumstances you can lower your interest rate and/or your payment on your car loans. The bankruptcy code does not allow for the modification of your mortgage on your principal residence.
Chapter 13 does have some disadvantages such as:
● Only individuals with regular, stable income can file a Chapter 13 case.
● You cannot incur any new debt while you are in Chapter 13. If you have to purchase a new car or refinance your home, you will have to get the trustee's approval.
● You can pay any back child support or alimony that you owe over time; however, you must remain current on your alimony and support payments after you file your case. If you fall behind in these payments, your case can be dismissed.
● Student loans are generally not discharged in a Chapter 13 case and are treated like all other unsecured creditors. As such, if you are paying a small percentage of the amount you owe to your other unsecured creditors, your student loans will receive that same percentage. At the end of your case, the remaining balance of your student loans, plus accrued interest will still be owed.
● Failing to your file tax returns or pay taxes which become due after your case is filed, can result in your case being dismissed.
● A Chapter 13 case in which you pay less than 70% of the amount owed to unsecured creditors has the same effect as the filing of a Chapter 7 case. Rather than being done with your case in 120 days, you will remain in bankruptcy for 36 to 60 and your case will be treated as if it were a Chapter 7 case.
If you are ready to take charge of your financial life, call the office of Melinda Murphy Dionne, P.C. We will meet with you and provide you with a free initial consultation. Don and Melinda will take the time to get to know you and your situation. They will help you develop a plan that will provide you with the relief you need.
Please call us today to set up your free initial consultation.
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We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code. No representation is made that the quality of legal services to be performed is greater than the quality of legal sevices performed by other lawyers.
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