Discharge Most of Your Debt, Keep All Your Stuff

If you do not qualify for chapter 7 bankruptcy, or if you choose chapter 13 bankruptcy, you still get to discharge all of the debt you cannot afford to pay.  It does not mean you have to repay your debt.  If it did, what would be the purpose of bankruptcy.  In chapter 13 you simply show the court what you can afford to pay.  This might be as little as $100 a month.  You pay that amount over a period of time, and the rest is discharged.

Filing Chapter 13 Bankruptcy in Prescott

Are you searching for a way to get out of debt? The crushing weight of debt impacts all areas of your life — financial, emotional, and physical. The stress from debt problems can cause depression, high blood pressure, marital problems, and problems at work. However, there is an answer to your financial problems.

A Chapter 13 bankruptcy case provides the debt relief you need to get back on track financially. It provides a fresh start by allowing you to develop an affordable repayment plan for your debts. In many cases, the circumstances that led to a debt problem was not within your control. However, you can take control of your finances back by reorganizing your debt through a Chapter 13 bankruptcy plan.

What is a Chapter 13 Bankruptcy?

Chapter 13 is a reorganization bankruptcy. As part of the required bankruptcy forms, you must file a proposed repayment plan and serve a copy of the plan to all creditors and parties in interest. The plan sets forth how you intend to resolve various debts. For example, if you have a car loan, you can propose to repay the loan through your plan, or you can surrender the vehicle to satisfy the lien. If you want to keep your car, you might be able to reduce the interest owed and the amount owed for the lien. If you are behind on your mortgage payments, you can use a Chapter 13 case to catch up the payments and avoid foreclosure.

Most Chapter 13 bankruptcy plans are 60-month plans; however, some debtors can propose a 36-month plan. The length of the plan and the plan payments are based on several factors. Our experienced Prescott bankruptcy attorney analyzes your financial situation, including your income, expenses, assets, debts, and financial transactions, to calculate and propose the lowest plan payment allowable by law. If the Chapter 13 trustee or a creditor object to the payment or another term in the plan, our attorney negotiates the best settlement available.

When your repayment plan is complete, you receive a bankruptcy discharge that eliminates your legal liability for all discharged debts. In other words, creditors cannot collect the remaining balances owed on unsecured debts that are subject to the discharge.

Benefits of Filing a Chapter 13 Bankruptcy Case

Some of the benefits of filing Chapter 13 include:

  • Stop collection efforts by creditors.

    When you file a bankruptcy petition, creditors must cease all collection efforts. Therefore, filing a Chapter 13 case stops foreclosures, collection lawsuits, repossessions, garnishments, and seizures. Creditors may not proceed with any collection efforts without the permission of the bankruptcy court.

  • Save homes from foreclosure.

    If you are behind in paying your mortgage payments, filing under this chapter allows you to catch up the payments over several years. As long as you are current with your plan payments and the normal mortgage payments outside of the plan, you can keep your home out of foreclosure.

  • Keep your vehicle in bankruptcy.

    The same applies to your vehicle. If you are behind on your car loan payments, you can use a Chapter 13 plan to keep your vehicle. In some cases, you might be able to decrease the amount you owe for the lien and reduce the interest rate on the loan.

  • Unsecured debts are discharged for pennies on the dollars.

    Each repayment plan is unique; therefore, you might pay less toward unsecured debts than another debtor. However, in most cases, debtors get rid of general unsecured debts for pennies on the dollar.

  • Get rid of a second mortgage.

    If you owe more on your first mortgage than your home is worth, you might be able to value your second mortgage at zero. When successful, the amount owed on your second mortgage becomes an unsecured debt. The creditor receives the same percentage as other general unsecured debts.

  • Protect non-exempt property.

    If you have assets with equity, you can protect those assets in a Chapter 13. Instead of liquidating the asset, you can increase your plan payment slightly to protect the asset instead of losing it in a Chapter 7 bankruptcy.

  • Repay back taxes to the IRS.

    If you owe income taxes, you can repay those taxes to the IRS over several years. Most taxes are non-dischargeable, but a Chapter 13 gives you the time you need to pay back taxes without collection efforts by the IRS.

  • Learning how to live within a budget.

    Many debtors report that they learned to develop and live within a budget during their Chapter 13 case. The credit counseling course and debtor education course required as part of the bankruptcy process provide information that can help you be successful in your bankruptcy plan. You can also use the information to continue budgeting after your bankruptcy case ends so that you can reach your financial goals and continue to improve your financial well-being.

A Chapter 13 bankruptcy case can give you the opportunity to repay a portion of your debts while protecting your property and getting rid of unsecured debts. Chapter 13 is an affordable way to get out of debt.

Call a Prescott Bankruptcy Lawyer for Help

Our Prescott, Arizona bankruptcy law firm provides the legal advice and support you need throughout each step in the bankruptcy process. Our Prescott bankruptcy attorney analyzes your financial situation to provide you with your options for getting out of debt, including the pros and cons of each bankruptcy and non-bankruptcy option.

Contact our office by calling 928-277-4304, by using the contact form on our website to request a free bankruptcy consultation with an attorney.