Consolidate your debt into one payment you can afford.
Chapter 13 bankruptcy consolidates your debt into a monthly payment based on what you can actually afford to pay. Unsecured debts get paid back at 0% interest, and Chapter 13 can stop repossessions and foreclosures, and let you get caught back up on payments.
- How does Chapter 13 work?
- How is my monthly payment determined?
- How long do I have to pay for?
- What debts get paid at 0% interest?
- Can Chapter 13 stop foreclosure and repossession?
- Can Chapter 13 lower my car payment?
- What types of debt does Chapter 13 consolidate?
- Can Chapter 13 help with garnishments, frozen accounts, and collection lawsuits?
- Will I lose my house or car if I file Chapter 13?
- When do I get debt relief from my creditors?
- What happens to student loans in Chapter 13?
- Can I file Chapter 13 again if I already filed?
- When should I hire a Chapter 13 lawyer?
How does Chapter 13 work?
Chapter 13 bankruptcy is a set of federal laws created to protect and help people in debt. Chapter 13 consolidates debt into a single monthly payment where the amount you pay is based on your budget.
When you file, your creditors must immediately stop contacting you and collecting against you. Frozen bank accounts must be released; and wage garnishments and deductions stop immediately for qualified debts.
Bankruptcy laws like Chapter 13 have origins in the U.S. Constitution (Article I, Section VII, Clause IV, Bankruptcy) , and the concept of releasing debts owed by others is written in the Old Testament (Deuteronomy Chapter 15).
How is my monthly plan payment determined?
Chapter 13 monthly plan payments are determined by your debt, income, and budget. Chapter 13 is designed to be practical, meaning, you should be able to pay all of your regular living expenses and have enough money left for your monthly Chapter 13 payment.
There are several aspects of Chapter 13 that help you. First you may not have to pay back 100% of your total debt owed. Second, all interest on unsecured debts - like credit cards and medical bills - stops, saving you money every month. Third, all Chapter 13's payment plans must run for 36 - 60 months, meaning, if you cannot pay all your qualified debt back within 60 months the rest gets written off.
Sometimes, you must pay back 100% of your debt. One reason is if you make too much money based on your income, household size, and state you live in. Another reason is the type of debt that is owed. Sometimes, tax debts and other obligations must be paid back in full, and cannot be written off after the plan term is up. Finally, your plan payment can be affected if you have filed bankruptcy in the past. Some bankruptcy rules mandate a higher payment if you filed not too long ago.
It is important that you consult with a lawyer to determine your Chapter 13 monthly plan payment. A competent Chapter 13 lawyer will be able to assess your income, expenses, assets, and debts and determine what your monthly Chapter 13 payment should be, and how many months you should have to pay for.
How long do I have to pay for?
Chapter 13 laws mandate that all Chapter 13 plans must run between 36 and 60 months, or 3 to 5 years. Plans can run less than 36 months if 100% of your debt gets paid off.
The exact number of months your plan runs is determined by your monthly budget, your income, your debts, and assets. A lawyer will calculate your plan term and make sure it is feasibe for you.
What debts get paid at 0% interest?
One of the great things about Chapter 13 is, for many debts, you stop paying interest. Credit cards, medical bills, payday loans, past due utilities, and most debts not secured by property get paid back at 0% interest. This saves you a lot on your monthly payments and is one of the reasons why Chapter 13 works so well to help you.