Many people are interested in filing Chapter 13 for lots of reasons. The number one reason why people file Chapter 13 is to save their home from foreclosure. In fact, hardly a day passes in my office that someone doesn’t call up asking for an appointment to talk about Chapter 13 bankruptcy to stop their foreclosure. And, foreclosures in the Dayton Ohio area are on the rise right now.
There are many other reasons to file Chapter 13. Often times, people want to pay back some of their debt and simply can’t make satisfactory arrangements with their creditors to do this. Creditors typically will not agree to payments as low as we can get in a Chapter 13 bankruptcy.
What About Creditors?
Chapter 13 bankruptcy is not based on what creditors want to agree to. Chapter 13 bankruptcy uses other factors, including what you can afford to pay.
Compared to Chapter 7 bankruptcy, Chapter 13 bankruptcy is much more flexible and can accomplish many things that Chapter 7 simply cannot. Chapter 7 bankruptcy is a rather simple and basic kind of bankruptcy while Chapter 13 bankruptcy is a very flexible tool.
One of the common misconceptions that I regularly hear about Chapter 13 bankruptcy is that it is a kind of payment plan that requires you to pay back all of your debt. This is not true – never has been true. Chapter 13 bankruptcy only pays back sometimes one penny on the dollar. The Chapter 13 bankruptcy plans are customized. Each case is based upon the income of the family, the kind of debt that the family has, and several other factors.
Probably the second most common reason for filing a Chapter 13 bankruptcy is that a person has filed a Chapter 7 bankruptcy within the last eight years. You cannot file Chapter 7 bankruptcy any sooner than every eight years counting from the filing date of the previous bankruptcy. But you can file Chapter 13 bankruptcy and get a discharge of your debt only four years after the filing date of your previous bankruptcy. Therefore, the Chapter 13 bankruptcy may be only bankruptcy option available for you.
How Does The Payment Plan Work?
Chapter 13 bankruptcy requires payments from 36 to 60 months. Payments can be as little as $83 per month. Sometimes, Chapter 13 bankruptcy will allow you to keep your car and pay much less than you actually owe. This is called a cram down.
And, sometimes, we are able to eliminate second mortgages entirely through Chapter 13 accuracy. This is not something that can be accomplished in a Chapter 7 bankruptcy.
Chapter 13 bankruptcy as other advantages as well. While person is in a Chapter 13 bankruptcy they are essentially protected from their creditors for the entire time that they are in their Chapter 13 case. And, should something happen during the period of time of the bankruptcy is open, sometimes the bankruptcy itself can be modified to accommodate the changing circumstances. This is not possible in a Chapter 7 bankruptcy which is only open for about five months from beginning to end.
If you think that you need to file Chapter 13 bankruptcy you should be sure to check with an bankruptcy attorney in Ohio, who is trained and certified, and has many years of experience because Chapter 13 is probably the most complicated kind of consumer bankruptcy that exists.