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Reorganize And Repay Debt Through Chapter 13 Bankruptcy

Many people who struggle with serious debt could eventually repay it if they had more time and more favorable repayment terms. That’s the idea behind Chapter 13 bankruptcy. Unlike Chapter 7, which discharges most unsecured debt, Chapter 13 focuses on reorganizing debt and repaying it manageably over time – typically a period of three to five years.

If you know you won’t qualify for Chapter 7 or just want to better understand your debt relief options, contact the Law Office of Christopher G. Frey, Esq., and speak with me about Chapter 13 bankruptcy during a free initial consultation. I have more than 35 years of legal experience, and I have earned a reputation as a dedicated advocate for my clients. I will work just as hard for you.

Creating A Manageable Repayment Plan

When filing for Chapter 13 bankruptcy, you will need to create a repayment plan with the help of your bankruptcy trustee to pay back your creditors. You will have to make payments to the court-appointed trustee, who will then distribute the money to your creditors. These payment amounts will be based, in part, on calculated disposable income, which is the amount of money left over after a debtor pays all of his or her regular monthly expenses. In Chapter 13 bankruptcy, a debtor must pay the creditors who are not considered priority creditors with the disposable income he or she has each month. This amount is calculated by subtracting all of the deductions from his or her monthly income.

The Chapter 13 disposable income test is designed to make sure that every cent of the debtor’s disposable income is put towards paying off their debts. This ensures that the debtor made every effort to pay off all of his or her creditors during the repayment period. The test is based on the amount of disposable income left over after all of the debtor’s living expenses are deducted, including mandatory payments and childcare costs. It also considers priority debts such as medical bills and secured debts.

Your plan will pay your secured creditors at least the value of the collateral, but will also include some payments towards unsecured debts. Secured debts generally involve assets, such as car loans or mortgages. It’s important to pay these debts in full.

The length of your repayment plan depends on your income and the amount of debt to be paid. If you make less than the median income, your repayment plan can last up to five years. Some plans are as short as three months, but many last three to five years.

How Much Does Chapter 13 Cost?

There are many costs associated with filing for Chapter 13 bankruptcy. Filing fees are determined by the district in which the bankruptcy was filed. However, there are some basic fees that are the same regardless of bankruptcy type. These fees include attorney fees, filing fees, credit report fees and credit counseling fees. Depending on the complexity of your bankruptcy case, you may also have to pay additional fees.

The bankruptcy court appoints a trustee who makes payments to your creditors. This trustee also receives money from your bankruptcy plan. You must file your most recent federal tax return as part of the bankruptcy process. Additionally, you must file all required state and federal tax returns, and you must surrender any federal and state refunds.

How Chapter 13 Compares To Chapter 7

As mentioned above, the two most common types of personal bankruptcy deal with debt in fundamentally different ways. While Chapter 7 may initially seem better (in that it is shorter and discharges debt rather than having to repay it), there are also some tradeoffs. Not everyone qualifies for Chapter 7, and those who do risk losing some personal property to repay creditors. Also, a Chapter 7 filing stays on a person’s credit report for 10 years.

By contrast, Chapter 13 stays on for only seven years. It also allows debtors to hold onto personal property that is still being paid off so long as they can become current and stay current on payments. I can discuss these and other details with you during our first meeting.

Contact Me Today For A Free Case Evaluation

The Law Office of Christopher G. Frey serves clients in and around Tampa, Florida. To take advantage of a free initial consultation regarding your debt relief options, call my office at 813-322-2419 or submit an online contact form.

This is a debt relief agency. I help people file for bankruptcy relief under the Bankruptcy Code.