WHAT IS CHAPTER 13?

Congress enacted Chapter 13 as a federal bankruptcy law to help individuals work themselves out of financial difficulties with a special plan to repay their bills.

If you choose to file a Chapter 13 case in which you repay your creditors what you can afford over 3 to 5 years,  you may also want help with preparing your chapter 13 plan and with the confirmation hearing on your plan which will be before a bankruptcy judge.

CHAPTER 13: A Solution to Financial Problems

Chapter 13 Benefits:
• Your payments are carefully budgeted and are usually reduced.
• The court controls the costs.
• Creditors can no longer contact you or garnish your wages.
• Many creditor charges are usually stopped.
• You may save money.
• Repossessions and foreclosures are usually stopped.
• Your savings and equity will be protected.

THE CHAPTER 13 PLAN

• Reduced Payments to Fit a Budget
Under a Chapter 13 plan, you’ll often find that monthly payments are reduced because the court can extend your repayment period for up to 60 months. You still make payments in an orderly way, but they are more likely to be payments you can afford.

• Help from the U.S. Bankruptcy Court
You make all payments into a Chapter 13 plan with a U.S. Bankruptcy Court trustee. This trustee makes certain your creditors receive the money.

• No Fee Surprises
All costs, including a portion of your attorney’s costs, are included in the payment schedule. Only a small fee  is needed to put the plan into effect.

HOW CHAPTER 13 PROTECTS YOU

• Chapter 13 Stops Creditors from Calling
The same restraining order that goes into effect when you file a Chapter 13 plan prevents creditors from trying to collect from you by telephone, in writing or by starting lawsuits against you. You’re instantly relieved from creditor harassment because – as long as you make your plan payments – all collection contact goes through your bankruptcy trustee.

• Chapter 13 Freezes or Reduces Interest Charges
Most of your creditors can no longer charge you the same interest rates after you file a Chapter 13 plan. Interest charges are either reduced or eliminated.

• Chapter 13 is Economical
The amount you’ll save in interest and creditors’ charges will probably more than pay for your costs to file a plan.

• Chapter 13 Can Usually Stop Repossessions and Foreclosures
Chapter 13 allows you to keep possession of most property, including your home. In most cases, the Chapter 13 plan prevents creditors from trying to repossess your car or foreclose on your home.

• Chapter 13 Protects Equity and Savings
A Chapter 13 plan can help you hold onto your savings and any equity you may have in real estate, stocks, bonds and insurance policies.

HOW TO FILE A CHAPTER 13 PLAN

• Filing a Plan
You need the guidance of an attorney to help you decide whether Chapter 13 is the right solution for you. If it is, the attorney can prepare a plan a file it with the U.S. Bankruptcy Court to start Chapter 13’s benefits working for you.