Congress is authorized to set Bankruptcy Laws by the U.S Constitution, those laws are referred as the Bankruptcy Code. Chapter 13 of the bankruptcy code refers to that chapter which allows individuals with regular income to repay some or all of their debt over a period time.

 

Chapter 13 bankruptcy proposes a repayment plan to repay creditors. The chapter 13 plan can repay such things as back mortgage payments, back taxes, back child and spousal support. The plan can also propose to remove, or strip second mortgages. What this means is that an individual can pay back anywhere between 0% and 100% to creditors. The amount of payment is based the individual's ability to pay.

 

The ability to make a Chapter 13 plan payment will depend on factors such as income, family size and monthly expenses.

Chapter 13 has some advantages over chapter 7. It allow the individual to repay debts that are not dischargeable in a Chapter 7 over an extended period of time. In addition, Chapter 13 can get the individual current on mortgage payments so the mortgage company will not foreclose on their house. Chapter 13 may also help keep their car by paying the car through the Chapter 13 plan. In some circumstances Chapter 13 can also remove mortgages on a house.

 

"Should you file for Chapter 13? If you do, what will your monthly payments be? What are the advantages and disadvantages to you for filing?"

 

The only way to answer these questions to set up a free consultation with our office where we will be able to answer these questions.