Chapter 13

Chapter 13 bankruptcy, often called “wage-earners bankruptcy”, provides a person with a way to achieve a new start, but requires the filer to pay off some of their outstanding debts. Under the terms of Chapter 13 bankruptcy your unsecured debts are combined into one category and a payment plan is developed based on calculations of your disposable income.

You will still have enough of your income to pay your living expenses, such as house payment, car payment and utility bills, but the largest part of your income above those expenses will be used to pay off your unsecured creditors over a 3 to 5 year period. Once the agreed payments have all been made, you will receive a discharge for your debts that were included in the bankruptcy, whether or not the payments satisfied the outstanding balance.

Filing a Chapter 13 bankruptcy requires you to submit a detailed budget to the court and the trustee. It may take time for you to compile all the records necessary to file a Chapter 13 case. Your Guerami Law bankruptcy attorney will help you evaluate your financial situation and prepare your case for court.

When you file your case, you must begin making payments to the Chapter 13 trustee who will oversee the payment of your debts in the bankruptcy case. If you wish, most trustees will allow you to set up an automatic draft so that payments can be made from your bank account automatically.

Typically debts that you owe to the government are not dischargeable; but including them in your Chapter 13 plan can have many benefits. Chapter 13 bankruptcy freezes interest and penalties on taxes. This will allow your payments to go directly to the principle, greatly reducing your interest and penalty burden. Chapter 13 will stop the government from adding more penalties and interest to your back taxes.

For more information on the protections available under Chapter 13 bankruptcy, call The Guerami Law Firm and schedule your FREE appointment.