Chapter 13 Bankruptcy
Chapter 13 is a type of bankruptcy that is increasing
in popularity but is not well understood by many. Unlike
chapter 7 where the debtors lose their assets and immediately
start over, chapter 13 allows debtors to keep their
assets in exchange for adopting a court-approved "plan" to
repay all or a portion of their debts out of their
future income for the next 5 or more years. The debtor's
plan must provide that the debtor will pay all of his
disposable income (the amount of money the debtor has
left over after paying his current year's taxes and "necessary
living expenses") to his creditors every month.
It doesn't matter how little this monthly payment is,
as long as it is large enough to pay certain "priority" debts
in full during the life of the plan. In exchange for
successfully completing the plan, the debtor receives
a discharge from all debts to the extent not paid during
the plan.
Why can this be better than filing a chapter 7?
Chapter
13 can be useful in several situations. It allows
a homeowner facing foreclosure to keep his home, start
paying the future mortgage payments on time, and
repaying the back, unpaid mortgage payments (called
the "arrearage")
over the plan period. It can also help if the debtor
has a civil tax penalty. These penalties cannot be
discharged in a chapter 7 and must be paid in full
over the life of the plan in a chapter 13. But in a
chapter 13, usually the penalties and interest stop
which allows the taxpayer/debtor to pay the debt much
faster than outside of chapter 13.
We know the answers and we can help
solve your tax problems
Contact
us now to get your life back.
Also visit Larry Heinkel's web site for Bankruptcy
Law:
www.MyFloridaBankruptcyLawyer.com
