Overview of a Chapter 13 Bankruptcy

May 13, 2014

Chapter 13 is a form of bankruptcy in which debts are discharged through a structured payment plan over 36-60 months.  An “automatic stay” goes into effect immediately and stops creditor activity.  You can reinstate a suspended license and gain immediate protection against home foreclosure, vehicle repossession and all of your other creditors.  It will lift wage garnishments, stop lawsuits and prevent money judgments being entered against you by your creditors.  All of the benefits of a Chapter 13 Bankruptcy are available to an individual in Illinois that has too much income to file a Chapter 7 Bankruptcy and/or he or she wants, amongst other things, to possibly pay pennies on the dollar of debt owed, reinstate his or her license, save a home from foreclosure or a vehicle from repossession, protect equity in personal or real property and much more. 

 

The repayment plan under Chapter 13 is structured around a person’s budget to ensure that the Chapter 13 Plan is actually feasible.  Making on-time payments under a confirmed plan allows a person to maintain all of the benefits that a Chapter 13 Bankruptcy offers.  Instead of paying multiple bills, loans and credit cards, a Chapter 13 repayment plan consolidates all debts and requires the person to make only one payment that the Trustee will then distribute to his or her creditors.  Further, depending on the creditor, little to no interest will be required during a Chapter 13 Bankruptcy.  The amount that must be repaid is based upon the debtor’s ability to pay using the Illinois “means test.”  This test takes into account a number of factors, including the debtor’s disposable income.  This means that a person could potentially pay as little as 10% of the actual debt owed to unsecured creditors (medical bills, credit card debt, personal loans, payday loans, utility bills etc.); the other percentage of the debt that is not paid through the plan is forgiven once the Chapter 13 Bankruptcy is successfully completed.  An experienced Bankruptcy attorney at JRQ & Associates will help a potential filer determine his or her payments that will be required through the plan.

 

Other attractive possibilities under a Chapter 13 Bankruptcy include the stripping of second mortgages and cram downs of certain property, homes and vehicles.  What this means is that you will pay the market value of the property, home or vehicle; the rest will be considered unsecured and will be paid at the percentage you are paying to other unsecured creditors.  Certain exceptions and requirements apply, so an attorney at JRQ & Associates will go over your situation with you and determine if you qualify at your free bankruptcy consultation.  Call today to schedule an appointment

 

Anyone considering a Chapter 13 bankruptcy in Illinois should contact an experienced Bankruptcy lawyer at JRQ & Associates for a free consultation.  One of our attorneys will provide tailored advice about whether to file a Chapter 7 or 13 under the Bankruptcy Code.  Call or email us now to set up your appointment.  We will help ease your mind and get your life back on track.  

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