Chapter 13 Bankruptcy: Know Your Options
Chapter 13 bankruptcy is a consolidation plan based on what you can actually afford over the course of three to five years. Often, amounts paid back are less than the full amount owed. The eligibility tests in a Chapter 13 bankruptcy are similar to the tests in a Chapter 7 bankruptcy. However, in a Chapter 13 bankruptcy, instead of showing that you cannot afford to pay anything, the test shows how much you can afford after deductions for reasonable, necessary expenses. This means that the court will look at your income minus what you need to live, and the court will set a payment that you can afford.
If you are able to fully satisfy the terms of the repayment agreement, all of your remaining debt that is eligible for discharge will be released. Keep in mind, the total amount of payments that creditors will receive in a Chapter 13 bankruptcy must be greater than or equal to the amount that creditors would receive in a successfully filed Chapter 7 bankruptcy.
Whereas a Chapter 7 bankruptcy is a liquidation, a Chapter 13 bankruptcy is simply a reorganization. If you want to keep your nonexempt property, hav a steady income, and have disposable income, a Chapter 13 bankruptcy may be your best option to eliminate debt.
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To speak with an experienced bankruptcy attorney, call us in Livonia at 734-779-9999. You can also set up an appointment by completing our contact form. Please include your name and a time you would like to meet. We look forward to hearing from you and helping you make a fresh start.