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Call us now or use the form below. Frequently Asked Questions about Chapter 13 BankruptcyQ: 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 is no longer liable for the remainder of his or her dischargeable debts. Q: How long does it take to complete a Chapter 13 plan? A: A Chapter 13 plan lasts for three years unless the debtor can pay off all debts in less time. Under certain circumstances, the court may approve a plan that lasts as long as five years. Sometimes, bankruptcy is sometimes set off by one unfortunate or tragic event; some consumers simply cannot curb overspending. Filing bankruptcy solves only part of the problem, and there is an urgent need for the continuing assistance of a knowledgeable attorney who can provide solutions to financial problems. Chapter 13 Informational CenterA Chapter 13 bankruptcy allows individuals to protect secured property while reorganizing debt through installments or payment plans. You may qualify for a Chapter 13 bankruptcy if you have secured debt, such as a mortgage, or you want to keep certain property, like your home. Many people will file for a Chapter 13 bankruptcy when they do not qualify for a Chapter 7. At Gillespie & Murphy, P.A., our attorneys are dedicated to helping individuals and families find debt relief through bankruptcy. We can assist you in exploring all of your options and alternatives to find the appropriate solution for you and your family Chapter 13 Bankruptcy - An OverviewThe 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 to determine whether filing under Chapter 13 is right for you. Bankruptcy law provides two basic forms of relief: (1) liquidation and (2) rehabilitation or reorganization. Most bankruptcies filed in the United States involve liquidation, which is governed by Chapter 7 of the Bankruptcy Code. A reorganization or rehabilitation bankruptcy under Chapter 11 or 13 of the Bankruptcy Code is, however, the option often preferred by the courts. Under Chapters 11 and 13, creditors may be provided with a better opportunity to recoup what they are owed. Alternatives to Filing BankruptcyDebtors who have faced obstacles to paying off their debts when due have no doubt received more than their fair share of demanding letters and phone calls, and the thought of filing bankruptcy and getting rid of their debts, and thus the constant demands, can be quite appealing. Before making a decision to pursue that route, which can have long-term effects on credit rating and the ability to make large purchases, debtors may wish to consider other, less drastic alternatives. Debts that Remain After a Chapter 13 DischargeA 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 include, generally, 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, that extend beyond the term of the plan. Effects of a Salary Increase on a Wage-Earner Plan Under Chapter 13When 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. Rebuilding Your Credit After BankruptcyBankruptcy 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. 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. Chapter 13 Resource Links
United States Bankruptcy Courts
Bankruptcy Glossary
Bankruptcy Fees
Bankruptcy Forms
Chapter 13 Basics
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