Chapter 13 CHAPTER 13 BANKRUPTCY (Reorganization)CHAPTER 13 BANKRUPTCY - is the second most commonly filed bankruptcy for consumers. It is called a "Reorganization Bankruptcy" because it allows a consumer to pay his or her creditors back over a 3 - 5 year payment plan. The 3-year or 5-year plan length is determined by whether the bankruptcy filer's gross annual income is less (3-year plan) or greater (5-year plan) than the median income for his or her household size (this is called the "Median income test.") In Chapter 13, a filer is allowed to keep all of their assets (with limited exceptions). Also, whatever creditors are not paid off during the 3 - 5 year payment plan, the debts related to those creditors will be eliminated with a discharge at the end of the plan. Although not necessary, it is helpful to have consistent income in this type of bankruptcy. Personal property secured loans (e.g., secured by personal property like: automobiles, appliances, furniture, equipment, etc.) can be crammed done if certain legal conditions are met (i.e., the loan amount is crammed down to the current market value). However, real property loans (e.g., a house, condo., land) cannot be crammed down, but can be modified to some extent during the Plan. In a Chapter 13 bankruptcy a filer is completely protected from any collection activities by his or her creditors during the entire 3-to-5-year case through what is called the "Automatic Stay." In the vast majority of the cases the unsecured creditors' interest rate will be reduced from the contractually high interest rate to a zero percent interest rate during the bankruptcy. Powerful Reasons to File Chapter 13 BankruptcySchedule Your Consultation Now!Your first step to living debt free is just a phone call away! Call (503) 808-9032 to schedule an appointment. |
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