In order to determine which chapter of bankruptcy is right for you, it is important to understand each chapter and how it works. In contrast to a Chapter 7, where you surrender non-exempt assets in return for a discharge, in a Chapter 13 you surrender a stream of monthly payments in return for a discharge. Another way to view it is that in a Chapter 13 you keep all your property and, instead, pay monthly payments to your creditors, usually for 60 months. Chapter 13 has one particular feature that is unique – it can stop a mortgage foreclosure and give you an opportunity to bring your mortgage current thus saving your home. Reinstating a mortgage is discussed more fully below. You may have seen ads on TV offering a plan to solve your credit problems where “all your payments will be rolled in to one easy-to-make monthly payment.” Chapter 13 is similar to that idea. Chapter 13 allows you to hold onto your property and stop creditor actions while creating a new payment plan for your debt. Some people file Chapter 13 because, although they would prefer to file Chapter 7, they simply cannot qualify for Chapter 7 because their monthly income is too high. You can count on our Gainesville bankruptcy lawyers at Ruff & Cohen to offer you sound guidance and advice.
Candidates for Chapter 13 typically have regular income that can be used in part to repay debt. When you file for Chapter 13 bankruptcy, you agree to give up a certain portion of your income rather than a portion of assets. Your Chapter 13 plan will set a certain period of time (usually 60 monthly payments – 5 years) and a specific amount which you will be paying back to your creditors. The amount you pay each month may be adjusted during the time of the plan to take into consideration changes in your financial situation. It may seem simple enough, but it requires an experienced Jacksonville bankruptcy attorney who can assist you with the endless negotiations and paperwork.
As a result of agreeing to give up this portion of your income (you are allowed to keep enough of your income to meet minus your mandatory budget expenses), you will be provided with relief from creditor harassment. At the end of your plan when you have made all your payments, the bankruptcy court forgives any remaining unpaid balances on many debts like credit cards and all the other kinds of debts that are forgiven in Chapter 7 bankruptcy.
Our Gainesville Chapter 13 bankruptcy lawyers are here to help you decide if this chapter is right for you. Call us at (352) 364-8688 to make an appointment for a free consultation.