Under Chapter 13 of the Bankruptcy Law, individuals who cannot discharge their debts or want to keep their homes but have fallen behind in their mortgage payments or car payments can consolidate their overdue payments and repay their pre-filing arrears in monthly payments for a period of up to 5 years (60 months).
The amount of the monthly payment and the time period varies for each individual based upon a number of factors including:
- The monthly income of the individual
- An individual’s monthly expenses
- The amount of the debt and whether the debt is in the nature of a secured debt (i.e. home mortgage, auto loan) or unsecured debt (i.e. credit cards, personal loans, bank loans which are not guaranteed by a government agency)
Non-dischargeable priority debts, which include child support arrears, alimony or maintenance arrears, taxes owed government authorities, criminal fines, restitution, all debts which were reduced to a judgment prior to the bankruptcy filing, secured and priority debts, under Chapter 13 must be repaid 100% on the dollar.
Unsecured debts may be repaid at a minimum of 10% up to 100% based upon an individual’s available monthly income.
How the Chapter 13 Process Works:
After our initial consultation and a review of your financial situation, we will advise you as to whether you qualify for a Chapter 13 bankruptcy.
If we mutually agree that Chapter 13 is your best alternative, we will prepare a plan which will provide a monthly payment covering a period from 36 months to a maximum of 60 months. This one monthly payment will be paid to the Bankruptcy Court and at the conclusion of the time period, assuming all plan payments have been made, you will receive a discharge.
The payments will be made to a Bankruptcy Trustee who is authorized by the Court to receive your payments and distribute the plan payment to the creditors.
Common Advantages of Chapter 13:
- You can keep your property while spreading out time to pay past due accounts.
- You will have up to 5 years to catch up on delinquent accounts.