Chapter 13 Bankruptcy does not wipe out your debts, but rather, it establishes a payment schedule for you to pay back a percentage of your debts. In general, Chapter 13 Bankruptcy requires you to pay back your secured debt and as much of your unsecured debt as you can. Some debts must be paid in full, some debts can be repaid as a percentage of the original debt, and others debts don’t need to be paid at all.

Under a Chapter 13 Bankruptcy, the debtor proposes a written plan to pay their creditors back over a 3-5 year period. This written plan must detail all of the repayments (and their durations) that will occur. The proposed repayments must begin thirty to forty-five days after the case has started. During this period, creditors can not attempt to collect on the individual's previously incurred debt except through the Bankruptcy court. In general, an individual gets to keep their property, and their creditors will end up with less money than they are owed. During a Chapter 13 Bankruptcy, the individual is not permitted to obtain additional credit without the permission of the Bankruptcy court. During the repayment period, the Bankruptcy court will place restrictions on how the debtor can spend their money. There are scheduled reviews each year, and the debtors income increases, that must be reported to the Bankruptcy court, which can then potentially increase the amount that the debtor must pay back to their creditors.

Chapter 13 Bankruptcy allows an individual to pay back a portion of their debts, but will still have a negative mark on ones credit report that can remain for years to come. We usually do not suggest a Chapter 13 Bankruptcy unless a large portion of the debt owed is secured debt.

At S.J. Packman & Associates, before we make any recommendations, our attorneys, certified debt specialists, and paralegals, are trained to ask the right questions to find out about your specific situation. Based on your current income and your financial hardship, we will determine which course of action will work best for you. We do not only offer one path, as there is no one process that can solve everyone’s needs. We will take our time with you and help evaluate what your best course of action should be. Call now and one of our advisors will be there to get you started on your path to financial freedom. There is no obligation to enroll, so don’t delay.