Chapter 13 is sometimes referred to as "debt adjustment" bankruptcy. Unlike Chapter 7, in which property may be liquidated, Chapter 13 allows for the retention of non-exempt property under a reorganized payment plan. Chapter 13 can be an excellent option for individuals and families who have both significant income and significant unsecured debt. It is also a good option to avoid a foreclosure.

What Chapter 13 Can Do for You

Under Chapter 13, the debtor proposes a payment plan to the court to repay some debt over a three-to-five-year period. Chapter 13 requires the payment of secured debts and certain other obligations, such as child support, alimony, car and house payments, taxes and criminal fines.

However, general unsecured debts receive a percentage of what was owed, and the rest is discharged. The debtor pays the plan payment with disposable income, which is the income left each month after living expenses are paid. The attorney works with the debtor to assess his or her disposable income to ensure enough money is left over to live on and to pay monthly expenses.

During the repayment plan, creditors cannot collect or attempt to collect on pre-existing debt except through the court. At the end of the plan, the debtor has retained his or her property and is free of the excess dischargeable debt.

Is Chapter 13 Right for You?

Chapter 13 carries many benefits, including the retention of non-exempt property and reduced debt and debt payments. It is also highly effective in immediately halting foreclosure actions. It does, however, have its limits. Adequate disposable income must exist to pay all that is required to be paid in the plan.

Find out more about Chapter 13

To fully understand your Chapter 13 bankruptcy options, speak to an attorney at the Johnson Law Office. We offer free initial consultations, and can gather the facts of your case to determine your best options and present a no-obligation recommendation for your best course of action.

We offer flexible appointments and payment plans, and charge affordable rates. To discuss your bankruptcy options,contact us at 304-292-7933.

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We are a debt relief agency. We help people file for relief under the Bankruptcy Code.