Guiding You Toward A Brighter Financial Future

How Chapter 13 Bankruptcy Can Help You

Q: How does a Chapter 13 bankruptcy case work?

A: Chapter 13 of the federal Bankruptcy Code allows a consumer to repay all or a majority of his or her debts through a payment plan approved by the Bankruptcy Court. When the plan is in place, creditors generally are prohibited from collecting debts directly from the debtor. Instead of paying his or her creditors directly, the debtor pays a certain amount every month to the Chapter 13 trustee, and the trustee distributes the money to the creditors, as provided in the Chapter 13 plan. When the last payment is made, the debtor receives a discharge for the remainder of his or her dischargeable debts.

Q: How long does it take to complete a Chapter 13 plan?

A: For those who earn less than the median income for the state they live in, a Chapter 13 plan can be completed in as little as three years (36 months), If the debtor’s monthly income is higher than median income for their state, the plan will generally last for five years (60 months). By law, a Chapter 13 repayment plan cannot last longer than five years.

If your bills keep piling up, but you are concerned about filing for bankruptcy because you do not want to lose your home, Chapter 13 may be a good option for you. Contact an experienced bankruptcy attorney to discuss your options.

Chapter 13 bankruptcy protection enables qualified individuals to place debts, such as car payments, mortgage payments, income taxes and other obligations, into a repayment plan. At the law office of Mark T. Young & Associates, we provide comprehensive Chapter 13 bankruptcy representation. We invite you to learn more about how Chapter 13 protection may be the best solution for your financial situation.

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Chapter 13 Bankruptcy – An Overview

The bills are stacking up, demanding calls and letters are arriving with increasing frequency and despite the best of efforts, the overdue debts just cannot be paid. In such cases, filing bankruptcy under Chapter 13 of the Bankruptcy Code may provide a solution to what seems like an insurmountable problem. Once considered a last resort, bankruptcy has evolved into an accepted method of resolving serious financial problems. If you are facing serious financial challenges, it is important to seek the counsel of an experienced bankruptcy attorney at Mark T. Young & Associates in Hixson, TN, to determine whether filing under Chapter 13 is right for you.

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Debts that Remain After a Chapter 13 Discharge

A Chapter 13 discharge affects only those debts provided for by the plan. Any debts not provided for in the plan will remain, and the debtor will have to pay them in full, even after discharge. Additional exceptions to a Chapter 13 discharge may include: claims for spousal and child support, educational loans, drunk driving liabilities, criminal fines and restitution obligations, and certain long-term obligations (such as home mortgages or auto payments) that extend beyond the term of the plan.

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Effects of a Salary Increase on a Wage-Earner Plan Under Chapter 13

When a Chapter 13 debtor enters into a wage-earner plan, he or she commits the next three years’ disposable income — that portion of the debtor’s income not required to meet the necessary needs of the debtor and his or her dependents — to the repayment of debt. Often, a debtor’s income will increase after the plan is in place, and the question arises as to what becomes of this increase in income.

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Rebuilding Your Credit After Bankruptcy

Bankruptcy has a long-lasting impact on a person’s credit rating and on his or her ability to obtain credit in the future. The impact is not entirely negative, though. In some cases, filing bankruptcy may actually improve a bad credit rating. In addition, there are a number of steps a person can take to improve his or her credit after bankruptcy.

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Chapter 13 Resource Links

Bankruptcy glossary A glossary of bankruptcy terminology that explains, in layman’s terms, many of the legal terms that are used in cases filed under the Bankruptcy Code.

Bankruptcy fees Bankruptcy filing fees, maintained by the Administrative Office of the U.S. Courts on behalf of the U.S. Courts.

Bankruptcy forms Official Bankruptcy Forms, Procedural Forms and the Bankruptcy Forms Manual.

Chapter 13 basics General information about individual debt adjustment under Chapter 13 of the Bankruptcy Code.

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