Chapter 13 Bankruptcy

Chapter 13 bankruptcy is often referred to as a “wage earner plan” or a “debt repayment plan.” In Chapter 13 bankruptcy, the debtor files a “Chapter 13 plan” with the bankruptcy court agreeing to make the best effort to pay off as much debt as possible over a three- to five-year period of time.

Understanding Chapter 13 Bankruptcy

Repaying debts: Some debts must be paid in Chapter 13, others need not be. Some debts must be paid in full, others can be paid at less than 100 cents on the dollar. The debtor makes a monthly payment to a bankruptcy trustee determined by the debtor’s monthly take-home pay less than his or her monthly living expenses. This means that after the debtor has paid his or her monthly expenses, any money remaining is paid to the Chapter 13 trustee, who makes payments to the debtor’s creditors. Debts do not incur interest charges during the repayment period.

Calculating your payment: When you file for Chapter 13, the bankruptcy trustee will put you on a tight budget, taking a monthly payment from you and distributing a portion to that payment to each of your creditors. The amount of this payment is determined by subtracting monthly income from your living expenses. Any remaining income (after paying living expenses) must be paid to the trustee who will pay your creditors. Some people choose Chapter 13 bankruptcy because it can stop foreclosure on their homes.

After three to five years of staying on this tight budget, you should be caught up on your debt arrearages, and the plan should be satisfied. As with any bankruptcy plan, the terms of the bankruptcy are somewhat flexible. Typically, many unsecured debts are paid at a fraction of what you owe.

The experienced bankruptcy staff at O’Grady Law Office, P.C., will work hard to help meet your needs. We will take the time to explain the process to you. You will appreciate having an advocate in your corner.

Bankruptcy may not be Your Best Option

Of course, it is possible that you don’t truly need to file for bankruptcy. A careful analysis of your debt and your options will help you make a sound decision. Our law firm gives each client the personal attention he or she needs to get through the difficult times.

No matter what you choose to do about your financial problems, you would be well-advised to contact an experienced bankruptcy attorney. Changes in bankruptcy laws will make it harder to file for bankruptcy. A skilled bankruptcy lawyer will help you determine whether bankruptcy is still an option.

Contact a Consumer Debt Relief Attorney in Chicago and Rolling Meadows

For a free initial phone consultation in which we will work together to find the best debt repayment option for you, please call us at (312) 338-1808 or fill out our intake form.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

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