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A Chapter 13 bankruptcy is frequently referred to as the “Wage Earners Bankruptcy” because it involves a payment plan that requires some manner of income – despite its namesake, self-employed, unemployed and retired folks may all qualify for a Chapter 13 bankruptcy.
A Chapter 13 bankruptcy is generally more complex that its Chapter 7 brethren; while a Chapter 7 bankruptcy may be completed in as little as four months, a Chapter 13 will take between three to five years to complete. A Chapter 13 bankruptcy will generally require the debtor to pay back a portion of his/her unsecured debt; the amount paid by the debtor is largely determined by the debtor’s disposable income. At the end of the three to five year period, called the commitment period, the debtor will receive a discharge of the unpaid balance owing on most types of unsecured debts, such as credit card debt, unpaid medical bills, etc.
A Chapter 13 can be a powerful tool which yields certain benefits not available in a Chapter 7 bankruptcy. For instance, a Chapter 13 bankruptcy may give the debtor time to bring a mortgage current or pay off income taxes. A Chapter 13 bankruptcy may eliminate a junior loan or line of credit from the debtor’s home (see our discussion on “Eliminate Your Second Mortgage” for more detail). A Chapter 13 bankruptcy may lower the amount owing on a car loan or other secured obligation. A Chapter 13 bankruptcy will also stop tax liens, wage garnishments, asset levies, or a pending foreclosure.
Speckman Law Firm has successfully handled several hundred Chapter 13 bankruptcies. We have used the provides of the Bankruptcy Code to helped families save their home, remove junior liens from their property, pay-off taxes, and eliminate burdensome debt. We are proud of the work we have done. Call us today to see if a Chapter 13 bankruptcy is right for you – the consultation is absolutely free.