Chapter 13 Bankruptcy:

Unlike a chapter 7 bankruptcy, chapter 13 is a reorganization of an individual’s financial situation. In some instances, the more powerful and sophisticated chapter 13 reorganization is a much better suited option than the relatively crude and straightforward chapter 7 bankruptcy.

The ‘wage earners’ reorganization can provide you with powerful options that put you, the filer, in driver’s seat.

For instance, while a chapter 7 bankruptcy generally does not empower the filer to modify the terms of their car or home loan, chapter 13 can provide such powers. Moreover, while a chapter 7 can sometimes temporarily stall a foreclosure or a vehicle repossession, a chapter 13 reorganization can allow a filer to modify the terms of their car or home loan in order to permanently keep the asset.

In all, the chapter 13 reorganization attorneys at ABL: Bankruptcy specialize in helping individuals obtain the fresh start they deserve and our attorneys will guide you through every step in the process, making sure you get started on the right track to long-term financial success.

When is chapter 13 appropriate?

If a prospective filer has objectives that would not be satisfied in a chapter 7 bankruptcy, or is otherwise not eligible for a chapter 7 bankruptcy, the next step in evaluating whether an individual would be a good candidate for chapter 13 reorganization is to look at the consistency in the wages and income of the filer.

If a prospective filer historically had consistent wages and there is no indication that there would be a change in that regard, the prospective filer may be good candidate for chapter 13 reorganization.

How does chapter 13 bankruptcy work?

A chapter 13 works by calculating the filer’s monthly “disposable income” – which is the amount of income that remains after subtracting all allowable costs and living expenses. It is this “disposable income” that is used to calculate the filer’s monthly payments under a chapter 13 Plan of reorganization.

It is important to note that outside of a chapter 13 reorganization, most unsecured creditors will try to force individuals to pay the creditor’s minimum monthly payment.

The fundamental difference is that in a chapter 13 reorganization, the bankruptcy process completely ignores the minimum monthly payment that the creditor wants and allows the filer to instead pay to unsecured creditors only the amount that the filer can afford to pay, after subtracting the allowable costs and living expenses from the filer’s monthly income.

Our chapter 13 reorganization attorneys will help you complete your Plan of reorganization (usually 3-5 years), at which time most all of your remaining unsecured debts would be discharged and you would obtain a fresh start, free and clear of the burden of creditors.

Chapter 13 bankruptcy reorganization can help you stop a foreclosure of your home or a repossession of your vehicle.

A chapter 13 reorganization is also a very powerful tool to help filers save their home from foreclosure or prevent a vehicle from being repossessed. The filing of a chapter 13 petition will also immediately stop a foreclosure of the filer’s home and will allow the filer to possibly modify the home mortgage in order to prevent the home from being foreclosed upon. Similarly, the filer can sometimes prevent a repossession of their vehicle and also modify the terms of their car loan to better suit their income. The experienced chapter 13 reorganization attorneys at Bankruptcy – by ABL can help guide you through the chapter 13 process and will be with you every step of the way to ensure that you obtain the fresh start that you deserve.

Chapter 13 reorganization – super powers are super helpful for filers seeking a fresh start through a chapter 13 reorganization

The basic benefits of chapter 13 reorganization are the power to cram-down a chapter 13 Plan of reorganization upon objecting or unwilling creditors and the power to modify the terms of certain secured debts.

The cram-down provision is one of the basic tenets of chapter 13 reorganization and it is one of the prime examples of how chapter 13 reorganization fundamentally alters the debtor-creditor relationship and places the filer in the driver’s seat and gives the filer sufficient rights and powers to successfully reorganize their personal financial situation.

Unlike a chapter 7 that does not offer the filer any help to modify the terms of secured debts, a chapter 13 reorganization allows a filer to reject or modify nearly any contract or secured debt and to modify some of those debts that are retained.

Whereas outside of a chapter 13 reorganization a person would be limited to working out their debts on the creditor’s terms, in a chapter 13 reorganization it is the creditor who must work out the debts on the filer’s terms.

‘Super-dischargeability’ powers and the ‘co-debtor’ powers.

Whereas a chapter 7 can generally discharge certain unsecured debts, a chapter 7 is extremely limited in its ability to assist the filer with other types of debts known as nondischargeable debts.

A chapter 13 reorganization, on the other hand, can sometimes employ super-dischargeability powers to rid the filer of certain debts that would be nondischargeable under a chapter 7 or to assist the filer by allowing them to make a payment plan for tax debts and by preventing the taxing authorities from accruing late fees and penalties to tax claims.

The co-debtor powers prevent a creditor from pursuing the filer or the filer’s co-debtor so long as the filer proposes to pay the co-signed debt in full. This co-debtor power is very important for filers who have had friends and relatives co-sign for certain debts, as it allows the filer to protect the co-debtor from the creditor’s collection attempts.

Our chapter 13 Bankruptcy reorganization Attorneys specialize in making sure our clients properly employ the rights and powers of their chapter 13 reorganization in order to reach the best possible client outcome and help clients get on the right track to long-term financial security.

When is a chapter 13 reorganization a better choice than a chapter 7 bankruptcy?

  1. If the filer does not meet the eligibility requirements for a chapter 7 bankruptcy, such as not satisfying the means test or owning more assets than can be exempted in a chapter 7 bankruptcy.
  2. If the filer is behind on their home mortgage or car loan and wish to retain the asset. Only a chapter 13 reorganization will allow the filer to make a plan for repaying the missed payments and possibly modifying the terms of the loan.
  3. If the filer has tax debts or other debts that would be nondischargeable in a chapter 7.
  4. If the filer received a chapter 7 discharge within the previous 8 years.
  5. If the filer has co-debtors on any of their consumer debts.
  6. If the filer has second or third mortgages on their home and the home’s value does not exceed the total of the three home mortgages, in which case the filer may be able to strip the “underwater” mortgages and treat them as unsecured debts under a Plan of reorganization.

[gravityform id=”2″ name=”What’s Next? Take The First Step.”]