Chapter 13 Bankruptcy

Chapter 13 bankruptcy, also known as reorganization bankruptcy, is an ideal solution if you are facing foreclosureof your house and/or repossession of other assets.

Much like Chapter 7 bankruptcy, you will be assigned a Trustee after your file a Chapter 13 bankruptcy petition. However, unlike the Chapter 7 bankruptcy process, your Trustee will NOT attempt to liquidate your assets. Rather, your Trustee will formulate a repayment plan contingent on your disposable income. Your disposable income is calculated by subtracting your necessary/regular living costs from your net income.

The length of the repayment plan typically varies from three to five years based on your disposable income as well as additional secured and unsecured debt (please visit our bankruptcy FAQ page to learn more about the differences between secured and unsecured debt).

Your repayment plan will be constituted of the following:

  • Financial Fulfillment of Priority Debts- Debts are prioritized. Certain debts that must be paid in full jump to the head of the bankruptcy repayment line. This may include debts such as alimony, child support, and certain tax obligations.
  • Scheduled Repayments of Secured Debts-After priority debts are paid, you will have due dates in which you must submit the agreed upon repayment amount to your Trustee. The Trustee will then distribute your monthly payment to various creditors.
  • A Promise to Repay any Unsecured Debts with any Remaining Disposable Income-Any disposable income that you have left after your monthly payment to your Trustee must go towards repaying your unsecured debt. You will not have to repay these debts in full and in many cases, you will be paying a fraction of your initial debt. However, you always must be able to show that you are putting any remaining income towards their payment.

After your payment plan is successfully completed, your mortgage, car loan, and any other secured debt that initially fell under your Chapter 13 petition will be current. In addition, any remaining unsecured debts that are eligible for discharge will be wiped out.

It is our passion to bring relief and hope to our clients. AtBerger, Fischoff, Shumer, Wexler & Goodman, LLP, our attorneys will allow you to have a fresh start in which you can build your credit, set your financial priorities, save money, and create a strong foundation for your financial future. Please call us today for a free consultation so we can start providing you with the help you need.

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