Information on Chapter 13 Bankruptcy

A New Financial Start

Chapter 13 bankruptcy, also known as "wage-earners bankruptcy", provides a person with a new financial start. Unlike Chapter 7, however, Chapter 13 requires the debtor to pay off some of their outstanding debts through a bankruptcy repayment plan. Chapter 13 bankruptcy requires that all unsecured debts be combined into one category. Once that is done, a repayment plan is determined, based on your calculated disposable income.

The means test, a legal requirement under federal bankruptcy law, allows for you to have enough income to pay your rent, car payments, utility bills, and other necessary living expenses. The majority of your remaining, or disposable income, will be used to repay your unsecured debts within a 3- to 5-year period. Once all agreed payments have been made, a discharge for the remaining obligations will be issued. This does not mean the entire outstanding balance has been paid, however it does mean your obligations have been met, and your debts discharged by the bankruptcy court.

In order to file for Chapter 13, a detailed budget must be prepared and submitted to the court and the designated trustee. Preparations for Chapter 13 can often be lengthy, but Price Law Group will help you evaluate your financial situation and prepare your case for court. Since the Fair Credit Reporting Act was enacted, bankruptcy can now stay on a person's credit report for up to ten years. However, you can still get a mortgage loan as soon as a year and a half after filing for Chapter 13.

Say for example that you are in debt that you cannot comfortably afford to pay off. If this debt is isolated to a credit card or your mortgage loan, you may be able to simply reorganize your payments by speaking with your creditor. There are various ways that you can restructure your debt. One example is for Chapter 13 to partially discharge debt, while leaving some of it still owed. Another option is to petition for an interest rate change on the debts that you owe. Whatever the case, Chapter 13 may be your best option.

Debt Restructuring

For over 20 years the law group has been helping clients escape financial disaster and begin rebuilding their lives. In cases such as this it is important that each case is handled on a unique basis. An attorney from Price Law Group will review all your debts, including those government and tax debts, some of which could be reduced, based upon the specifics of your situation. Including tax debt in your Chapter 13 plan means interest and penalties on the debts could be eliminated, with great savings to you. This will allow your payments to go directly to the principle.