Unexpected events and circumstances can result in a financial hardship. Even individuals who have a generous salary, emergency savings, and other resources can struggle with debt problems. A sudden illness, accident, or other major change in your life can cause you to fall behind on your bill payments. Before long, you may feel hopeless because you do not see a way out.
A Chapter 13 bankruptcy case can be your way out of debt. Filing for bankruptcy relief under Chapter 13 can give you the time you need to catch up on your bills without losing your home or car. It can eliminate unsecured debts so that you have a fresh start when you complete your Chapter 13 repayment plan.
The bankruptcy team at Silverberg Law Firm LLC can help you explore your bankruptcy options, including a Chapter 13 case. During a FREE CONSULTATION with an attorney, you can learn more about Chapter 13 and the steps you need to take to get out of debt.
What is a Chapter 13 Bankruptcy?
Chapter 13 is a reorganization bankruptcy. It is referred to as a “wage earner” bankruptcy case because it is designed for individuals and couples who have a steady income to fund a repayment plan. Through your Chapter 13 plan, you reorganize your debts into an affordable monthly plan that allows you to regain control over your finances again.
Creditors are treated differently in a Chapter 13 plan based on the category of debt.
General Unsecured Creditors
General unsecured debts are debts that are not secured by collateral. In most cases, debtors pay a small percentage of their unsecured debt through their plan. The remaining balances owed to creditors holding general unsecured debts are discharged. In other words, you have no legal obligation to repay discharged unsecured debts.
Examples of general unsecured debts include:
Student loans are general unsecured debts. However, student loans are rarely dischargeable in a bankruptcy case.
Priority Unsecured Creditors
Some creditors are given priority in a Chapter 13 case. Your bankruptcy plan must pay priority unsecured debts in full. Even though you cannot get rid of these debts, you can spread the payments out over the 60-month plan to make the debts more affordable to repay.
Priority unsecured debts include most taxes, alimony, child support, and other debts owed to the government.
The advantage of the Chapter 13 plan is that it allows you to catch up back alimony and child support payments through the bankruptcy court instead of being held in contempt in family court. You also do not need to worry about the IRS garnishing your wages or continuing to penalties and interest.
Secured creditors hold liens on collateral. Examples of secured debts include motor vehicle loans, boat loans, and real estate mortgages. Because you can catch up past due payments to secured creditors through a Chapter 13 plan, filing a Chapter 13 case can save your home and your vehicles. However, there are a couple of special provisions that could help some individuals even more.
If your home is worth less than you owe on your first mortgage, you may be able to value your second mortgage at zero. In other words, you could get rid of your second mortgage in Chapter 13. Also, if your vehicle is worth less than is owed to the lender, you might be able to value the lien at the fair market value of the vehicle to decrease what you owe to pay off the lien on your car.
Calculating a Chapter 13 Plan Payment
Several factors impact the calculation of a Chapter 13 plan payment. Some of the factors used to calculate your bankruptcy payment include:
Our experienced Chapter 13 bankruptcy attorney calculates the lowest bankruptcy plan allowable by law. He uses his experience and knowledge of Chapter 13 to protect the best interests of our clients.
Stop Debt Collection Actions and Protect Your Property by Filing A Chapter 13 Bankruptcy
You can stop creditor calls and threats of foreclosure or repossession by filing a Chapter 13 bankruptcy petition. You can protect your property and get out of debt. You can relieve your stress and put yourself back on the pathway to achieving your long-term financial goals.
Contact Silverberg Law Firm LLC to speak with an experienced Chapter 13 bankruptcy attorney. Learn more about Chapter 13 during a FREE CONSULTATION.
At Silverberg Law Firm LLC our team will analyze your case and determine that whether bankruptcy is the right option for you. If yes, then we will handle every aspect of your legal process, start to finish.
Which will help you make the right choice, and get out of debt smoothly, and fast.
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