Chapter 13 Basics
Chapter 13, referred to as the “reorganization bankruptcy”, requires you to make payments to your creditors for a period of 3 to 5 years before your debts are discharged. There are several scenarios why a chapter 13 filing would be more appropriate than filing under chapter 7. For example, if your income calculation is over the limit or if your second mortgage is under water, a chapter 13 filing can be more useful. Upon a through examination of your circumstances, our bankruptcy attorneys will be able to determine which chapter of the bankruptcy code is more suitable for your situation.
How are my monthly payments calculated and distributed?
After factoring in allowable living expenses the court will determine your disposable income. While the court allows you to keep a certain level of your disposable income, the law expects that a large portion will go towards paying off your creditors over a 3 to 5 year period. It is important that you work with an experienced attorney who can claim qualified expenses and reduce your monthly payments as much ass possible. Once those payments have been made, regardless of whether they satisfy the entire liability, the court will discharge your remaining debt.
Upon filing a chapter 13 claim, all attempts by a creditor to contact you must stop and they must deal directly with your attorney. Following the filing, a 341a meeting is scheduled between you and your creditors. We will prepare you and accompany you during any meeting with your creditors. Afterwards, a monthly payment plan is submitted to the court and your obligations typically end with those monthly payments.