Chapter 13 Bankruptcy is a 36- to 60-month payment plan. It is an alternative to chapter 7 for consumers whose income is much greater than their expenses, or whose property values exceed available allowances. Chapter 13 bankruptcy can achieve the same successful results as chapter 7: a stop to creditor calls, lawsuits and garnishments, and protection of property. It has its own advantages too.

Who can file Chapter 13 Bankruptcy?

You can file chapter 13 bankruptcy with or without your spouse. A business or corporation cannot file chapter 13, but the business owner can.  Although it’s a monthly payment plan, you don’t have to be a wage earner. For practical purposes, the chapter 13 payment plan can be funded from any source. If you received a prior chapter 7 discharge, you can file chapter 13 four (4) years after the prior chapter 7’s filing date (or earlier, with limitations). 

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what debts does chapter 13 bankruptcy cancel?

Pursuant to payment of a portion of the debts (which can be very low or nominal), chapter 13 cancels most types of obligations, including those canceled in chapter 7.  Credit cards, medical bills, personal loans, pay day loans, civil judgments and business loans can all be discharged (canceled) in chapter 13. Deficiencies from repossessions and foreclosures are likewise forgiven.  

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Why file Chapter 13 Bankruptcy?

Even if you otherwise qualify for chapter 7 bankruptcy, you might opt to file chapter 13 instead due its unique benefits. For example, if you’re behind on your mortgage or vehicle loan, you can repay the arrears (late payments) over an extended time under chapter 13. We’ve helped many people save their cars and homes through affordable chapter 13 payment plans. 

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how does chapter 13 bankruptcy work?

In addition to the petition that lists your property, debts and other financial information, your bankruptcy attorney prepares a chapter 13 payment plan that provides for partial payment of debt and forgiveness of the balance. Once the chapter 13 case is filed, creditors must stop all attempts to collect on the debts. You would then commence monthly payments for a period of 36- to 60-months based on the terms of the chapter 13 plan. The plan would propose payment of an (often very low) percentage of the total debt; upon plan completion, the unpaid remainder of debt is discharged (canceled).  

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