Sometimes all people know about Chapter 13 bankruptcy is it is a chance to get out from under a ton of debt. While filing bankruptcy is not something that anyone enters into lightly, it is a good option to help you hold onto your property and give you more time to pay off your debts.
Discuss your case with a bankruptcy lawyer if you are deep in debt, and find out if Chapter 13 bankruptcy seems like your best option. Here in Minnesota, local bankruptcy lawyers Bill Kain and Margaret Henehan of Kain + Henehan suggest some things you may want to know about Chapter 13 bankruptcy.
The goal of Chapter 13 is to create a plan that makes it possible to pay off your debt. You must have a regular wage through steady employment to qualify for this. This type of bankruptcy is available to people that make over the median income in Minnesota and don’t qualify for a chapter 7 bankruptcy. It’s also available to people with any type of income that have fallen behind on rent, mortgage or car payments or have tax debt to work out.
Your lawyer will calculate how to pay off debt using your regular income. Generally speaking, if you have regular income and debts under a certain amount, you may be able to file for Chapter 13. Based on this, a repayment plan will be devised with a reasonable goal of paying the debts off in three to five years. At Kain + Henehan, we develop this plan with you. The payment plan is not developed by the Judge or your creditors. We believe if the payment plan doesn’t work for you, it won’t work for anyone else either!
Part of bankruptcy is discharging debt. A bankruptcy discharge releases the debtor from personal liability for certain specified types of debts. In other words, the debtor is no longer legally required to pay any debts that are discharged. The discharge is a permanent order prohibiting the creditors of the debtor from taking any form of collection action on discharged debts. You should work with experienced Chapter 13 lawyers, like us at Kain + Henehan to determine what can be discharged.
Chapter 13 Stops Creditor Harrassment
Chapter 13 stops creditors from calling and harrassing you or taking other legal actions to collect on your debts. Part of Chapter 13 is restructuring your debt in the form of a court-approved repayment plan. This plan stretches out repayment of debt over 3-5 years, which reduces payments and helps you catch up on missed mortgage payments and prevent foreclosure.
During this time, creditors cannot pursue collection activities against you, such as wage garnishments or repossessions. Creditors receive payments from you according to the plan, rather than proceeding with creditor collection.
One of the most significant advantages of choosing Chapter 13 bankruptcy is that it protects your house from foreclosure. Filing for Chapter 13 allows you to pay off secured debts such as a mortgage at a reduced rate that you can afford. With a properly structured repayment plan, filing for Chapter 13 can help you manage your debt and save your home from foreclosure.
It can also work for other forms of secured debt. You may be able to reschedule those debts, which can change the payment terms. However, you are required to make mortgage payments throughout the plan. Otherwise, it could void the protection for your house and other debts.
Getting out from under debt may mean that you need to consider filing for bankruptcy. To make an informed decision, talk with us at Kain + Henehan. We understand and empathize with your situation and can advise you if filing Chapter 13 is right for you. This is something that we do not think debtors should try to handle on their own.
If you are struggling with debt and bankruptcy is a possible option, contact Kain + Henehan by calling (612) 438-8006 or filling out the online form. Our experienced Chapter 13 bankruptcy lawyers can explain more when you talk with us.