Chapter 13 cases are similar to a consolidation in that you make a monthly payment to one place, a Chapter 13 Trustee, and the money is then distributed to your creditors under a Chapter 13 Plan. This plan is prepared strategically for you with help from your attorney.
The person you send the monthly payment to is called the “trustee” and they work in conjunction with the U.S. Bankruptcy Court and U.S. Trustee Office to administer your cases and distribute the payments in your case.
A Chapter 13 plan can allow you up to 5 years to repay your debts. This is a better option than consolidation for the following reasons:
1. You are given protection from your creditors, by an order, when the case is filed. This order is called an automatic stay and stops all collection action. Creditors cannot continue with a collection action unless they get permission from the bankruptcy judge.
2. In many cases, this stops all interest on the debts and you may be able to repay your creditors significantly less than you owe.
3. All wage assignments, garnishments, and tax levies must stop immediately.
Since 1995, our office has represented thousands of people in consumer bankruptcy cases and related matters in DuPage, Cook, Kane, Will, Lake, and Grundy counties.
Call to schedule your FREE consultation.
Many people file Chapter 13 because they are behind on their mortgage payments or homeowner association payments and want to keep their property. A Chapter 13 case will stop a foreclosure and give you time to bring the payment up to date. This will help you save your property.
If you are behind on your car payments a Chapter 13 case can stop repossession and, in many cases, lower your car payment.
If you have student loans, tax debts, or child support arrangements, and they qualify for discharge in a Chapter 7 case, they can be repaid through a Chapter 13 case. It will protect you from any wage garnishments or tax levies.
Chapter 13 is a valuable solution for repayment of tax debts or child support arrangements that do not qualify in a Chapter 7 case.
If you own property that would be considered an “asset” in a Chapter 7 case, you can file a Chapter 13 case and protect the property from creditors or liens.