Chapter 13 is a reorganization bankruptcy that can help people reduce their monthly payments and eliminate debts, all while keeping their assets. Not everyone can file for Chapter 13, however, and it is important for anyone considering bankruptcy to speak to an experienced attorney before they take any action that could potentially hurt their legal rights. The information below can help introduce you to Chapter 13 bankruptcy. For more information and to determine whether bankruptcy is right for you, call the Law Offices of Kenneth P. Carp today to speak with a St. Louis bankruptcy lawyer.
How Does Chapter 13 Work?
A Chapter 13 bankruptcy allows a debtor to reorganize debts in a way that results in more affordable monthly payments. It is distinct from a Chapter 7 bankruptcy (also known as a “liquidation bankruptcy”) in that it allows debtors to keep their property during bankruptcy. In Chapter 7, all of a debtor’s non-exempt assets are sold off to pay back debts.
In a Chapter 13 bankruptcy, the debtor proposes a repayment plan that will last anywhere from three to five years. If the court accepts the repayment plan, a debtor who makes payments receives protection from any collection activity from creditors, including phone calls, letters, repossession, foreclosure, and lawsuits.
Who Can File for Chapter 13?
Not everyone can file for Chapter 13. You must meet certain legal requirements regarding your total debt load, how much you will pay back to your unsecured creditors, and other issues.
If you are eligible to file for Chapter 13, the next question you must answer is whether Chapter 13 is right for you. In some cases, you may prefer to try to negotiate with creditors to settle, because a Chapter 13 filing will stay on your credit report for seven years.
Chapter 13 May Stop an Impending Foreclosure
Chapter 13 bankruptcy is often particularly attractive to homeowners who have fallen behind on their mortgage payments because it can sometimes stop foreclosure. Chapter 13 can include the past-due mortgage payments into debts you must pay back during the repayment plan. As a result, a homeowner who can afford the current mortgage payments can avoid foreclosure.
Call Today to Speak With a St. Louis and St. Charles Bankruptcy Attorney
If you are having trouble keeping up with your bills each month, speak to an attorney as soon as you can. Attorney Kenneth P. Carp has more than 25 years of experience practicing law and is committed to helping people get a fresh financial start through bankruptcy. To schedule a free consultation with Mr. Carp, call our office today at (636) 947-3600 or send us an email through our online contact form.