Chapter 13 Bankruptcy

Re-structure Payments and Eliminate Debt

Chapter 13 bankruptcy, also known as a “reorganization” bankruptcy, is a form of debt relief that is intended to help married couples or individuals who are struggling with financial hardship, but who earn too much money to qualify for Chapter 7 bankruptcy, or who own substantial equity in real estate.

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Stop Creditors' Collection Efforts

A Chapter 13 bankruptcy creates a 3 to 5 year re-payment plan that allows you to pay back part of your debt. At the end of the repayment period, the balance of your debt is eliminated. Certain debts, like student loans, cannot be eliminated in bankruptcy, but your repayment obligations will be reduced and deferred during the repayment period.

A Chapter 13 bankruptcy will stop creditors’ collection efforts, foreclosure proceedings, and wage garnishments, and will allow you to keep your house, car, and other valuable assets.

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Benefits of a Chapter 13 Bankruptcy

Chapter 13 bankruptcy helps people struggling with financial hardship by:

  • Lowering Car Payments. A Chapter 13 bankruptcy allows you to reduce your monthly car payment by giving you a new 5 year term in which to pay off your car loan, with the interest rate capped at 5%. For vehicles purchased more than 910 days before you file for bankruptcy, your repayment amount will be lowered to the vehicles current fair market value.
  • Reducing Mortgage Payments. A Chapter 13 bankruptcy gives homeowners up to 5 year to catch up on mortgage payments, and is available regardless of whether your house has been foreclosed on or not. Filing for a Chapter 13 bankruptcy will stop the foreclosure process, allow you to get current on your mortgage, and may allow you to eliminate second mortgages and home equity lines of credit. Back property taxes can also be rolled into your re-payment plan and paid off over the 5 year period. You qualify regardless of whether the mortgage is on your primary residence or on investment properties.
  • Deferring Student Loan Payments. Student loan repayments cannot be discharged (except in extreme circumstances). But, by filing for Chapter 13 bankruptcy, your student loans are not collectible and you make no payments on them for up to 5 years. During your re-payment period, student loan collectors will receive the same percentage as your other creditors, which is often pennies on the dollar.
  • Re-structuring Tax Payments. Taxes are not eliminated in a Chapter 13 bankruptcy, and are given priority in the Chapter 13 re-payment plan. However, you will be given the full 5 years in which to pay them off.

If you have questions about how a Chapter 13 bankruptcy is different from Chapter 7 bankruptcy, want to know which debts can be discharged and which ones cannot, or are curious about options other than bankruptcy, check out the FAQ's, and contact the Law Offices of Thomas J. Miinotti, P.C. today.

Struggling With Financial Hardship?

If you or your family is suffering from financial hardship and needs to re-structure your payment obligations and reduce your debt, contact the Law Offices of Thomas J. Minotti, P.C. today. Case assessments are free. Military veterans are eligible for discounted rates.