Chapter 13 or Why should I pay them back?

When you say the word bankruptcy, most people think of Chapter 7. Chapter 7 is a “liquidation.” That means that you turn over any assets you have that are not exempt, and in return your debts are discharged. It is the quickest and cheapest form of bankruptcy. But Chapter 13 is often the best choice for a number of reasons. Chapter 13 is a payment plan that lasts from 36 to 60 months. You pay whatever your “disposable income” is over the life of the plan and the remainder of debt is discharged just as in a Chapter 7. Why would anyone want to do this? Simple:

-You can cure a mortgage default through the plan without paying any additional interest.
-You can pay back taxes without paying any additional penalties or interest.
-You can “strip off” a second or third mortgage on your residence if your home is worth
less than the first mortgage.
-You can pay off debts that are otherwise non-dischargeable without creditor harassment.
-You can “cram down” a car or other property that is upside down. If your car is worth $10,000 but you owe $20,000 on it, you can pay only what it's worth through the plan and the rest is discharged.
-You can pay back all your creditors if morally compelled without harassment, garnishment and the other brain damage that comes from debt collectors.

While more expensive and time consuming than Chapter 7, Chapter 13 is also more flexible and can solve problems that Chapter 7 was never meant to address. I have been doing this for 30 years. My law firm is a federally designated debt relief agency and I help people using the Bankruptcy Code (among other options).

Got questions? Get answers! Free Consultation.

Timothy Canty, Esq.
(303) 670-2185

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