Chapter 13 Bankruptcy Overview

What Does Chapter 13 Mean?

In a chapter 13 proceeding under the U.S. Bankruptcy Code, the consumer reorganizes their finances with the approval of and under the supervision of the bankruptcy court. The debtor agrees to a repayment plan which allows creditors to be paid in a timeframe of 3 to 5 years. Those that file under Chapter 13 bankruptcy must have the ability to accommodate the repayment plan via a regular income. The repayment plan does not necessarily repay the total amount due to the creditors.  In most situations the unsecured creditors, such as credit cards, are paid a reduced percentage of the total amount due.

Chapter 13 is often used to save the consumer's house.  It gives the debtor time to repay the past due mortgage payments over the 3-5 year life of the repayment plan.  The mortgage holder normally cannot proceed with foreclosure during the plan, assuming the debtor is making his plan payments and current mortgage payments on time.

A chapter 13 bankruptcy filing differs from a Chapter 7 bankruptcy filing.  In chapter 7 the debtor is asking the court to discharge all of his unsecured debts.  In a chapter 13 the debtor is repaying his creditors over time and needs some "breathing room.".  In many chapter 13 cases a debtor who has a second mortgage on his house can have the bankruptcy court eliminate the second mortgage after successful completion of the repayment plan.

If you would like more information on this topic or other bankruptcy topics, please contact  our Pasadena office at  888.368.8941 (toll free) or 626.389.8575.  Mr. Phillip Myer will be happy to answer your questions for you.  . If you need assistance regarding a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, getting rid of the second mortgage on your house, stopping a foreclosure or wage garnishment, asset protection, discharging debt, etc. we can help!  Please contact us to receive a free consultation or visit our website at http://www.phillipmyerlaw.com/  to request an in-person consultation with an experienced bankruptcy attorney in the Pasadena, Glendale, Altadena, Alhambra, Sierra Madre, Los Angeles and San Gabriel Valley areas.