Chapter 13: BILL CONSOLIDATION PLAN

A Ch. 13 Bankruptcy is designed for individuals with regular income who would like to pay some debts in installments over a period of time. These are following guidelines this bankruptcy follows:

  • 3-5 year plan (depending on numerous factors)
  • You must file a plan with the Court
  • Must be approved by the Court
  • Attorney develops a plan for you
  • Can include the amount behind on a mortgage
  • Can include the amount behind on a vehicle
  • Plan may allow you to pay certain federal and state taxes over a period of time.
  • Plan can also allow you to pay your back child support
  • Plan may also lower your interest rate on certain secured debts down to the prime rate of interest. As of 2010, the prime rate is 3.25%.

CRAM DOWN CERTAIN DEBTS IN CH. 13 BANKRUPTCY!

In a Ch. 13 Bankruptcy, you may be able to “cram-down” certain secured debts. A “cram-down” means you can pay the lesser of the value of your collateral or the secured debt. If you have had your vehicle debt for two and half years, you can pay just the value of the vehicle and not the entire debt. For example, if you have owned your vehicle for 910 days and your vehicle is only worth $8,000.00 and you owe $15,000.00, you can pay your creditor $8,000.00 over a period of time. This may allow you to lower your vehicle note.

In a Chapter 13, you can cram-down other debts if you have had the debt for over a year. For example, you may be able to “cram-down” your mobile home, furniture notes, and appliances.

Ch. 13 Bankruptcy Can Include:

  • Credit cards
  • Medical bills
  • Signature loans
  • Payday loans
  • Collection agency
  • Overdrafts
  • Repossessions
The amount creditors receive depends on your income. After completing the payments under your plan, your debts are generally discharged. In most instances, the unsecured creditors only receive “pennies on the dollar.” This means you may owe $30,000.00 to your unsecured creditors; however, depending on your income, you may only have to pay them a few hundred dollars.

Ch.13: Some Debts ARE NOT Discharged:

  • Domestic support obligations
  • Most student loans
  • Certain taxes
  • Most criminal fines and restitution obligations
  • Certain debts which are not properly listed in your paperwork
  • Certain debts for acts that caused death or personal injury and contain long term secured obligations

*Debts are reviewed by an attorney in each case to determine their eligibility.