Chapter 13 bankruptcy is a debt relief option that is available to anyone with a regular income. It is dedicated to providing filers with protection from actions by creditors such as:
When a bankruptcy case is filed, an automatic stay is issued by the court, preventing action against you by creditors. You may be able to keep your house, your car, and other property.
How We Can HelpAt Lynch Law LLC, we are here to help you find out if Chapter 13 bankruptcy is the right option for you. If so, we can guide you through the process and protect your rights along the way. Our Naperville, IL bankruptcy attorneys offer both individual and small-business bankruptcy services.
Our Chapter 13 bankruptcy lawyers have decades of combined experience. Over the course of our careers, we have come to focus on the value of personal attention. When you choose us as your debt relief counselors, we will offer guidance that is tailored to your situation.
Chapter 13 bankruptcy, sometimes called reorganization bankruptcy, is quite different from Chapter 7 bankruptcy. In a Chapter 13 bankruptcy, you don't have to hand over any property, but you must use your income to pay some or all of what you owe to your creditors over time - from three to five years, depending on the size of your debts and income.
The three- to five-year repayment plan will be used to pay off debts such as:
- Credit card debt
- Mortgage payments
- Unpaid taxes, interest, and penalties
- Student loans
- Auto loans
- Medical bills
Chapter 13 bankruptcy isn't for everyone. Because Chapter 13 requires you to use your income to repay some or all of your debt, you'll have to prove to the court that you can afford to meet your payment obligations. If your income is irregular or too low, the court might not allow you to file for Chapter 13.
Your Chapter 13 plan must pay certain debts in full. These debts are called "priority debts" because they are considered sufficiently important to jump to the head of the bankruptcy repayment line.
Priority debts include:
- Child support
- Wages you owe to employees
- Certain tax obligations
Additionally, your plan must include your regular payments on secured debts, such as a car loan or mortgage, as well as repayment of any arrearages on the debts (the amount by which you've fallen behind in your payments).
The plan must show that any disposable income you have left after making these required payments will go toward repaying your unsecured debts, such as credit card or medical bills. You don't have to repay these debts in full (or at all, in some cases). You just have to show that you are putting any remaining income toward their repayment.
Once you complete your repayment plan, all remaining debts that are eligible for discharge will be wiped out.
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