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CHAPTER 13 BANKRUPTCY – The Repayment Plan
Chapter 13 bankruptcy is a court-supervised repayment plan, a consolidation of your debts into one payment. The Court has the power to force your creditors into one affordable payment.
Chapter 13 is designed to help people save their home or car, and to stop foreclosures or repossessions. It is designed to pay back your creditors over time, to pay off debts you cannot wipe out in a chapter 7 like student loans or parking tickets. Often we use chapter 13 to protect a cosigner from creditor harassment.
We can consolidate all of your debts (including credit card balances) and often you will not have to pay interest, nor even pay back the debts in full. This can often save you more money than the costs of filing the case.
Filing a chapter 13 case will stop a foreclosure in the State of Illinois as long as you file the chapter 13 before the “Sheriff’s Sale.”
Filing a chapter 13 can stop the repo man from taking your car; we can even get the car back after it has been repossessed in some circumstances (i.e. if you need the car to get to work). We also use Chapter 13 to protect your cosigners from collection activities while you make the payments through the court.
It is important that you discuss all of your options and your entire financial circumstances with an experienced attorney before you make your final decision as to which path you should take. Often refinancing your home can be an option to avoid bankruptcy, but you must be careful of people trying to take advantage of you. Also the danger in refinancing is that you pay off your credit cards with a new loan, secured by your home, but you once again run up those credit cards.
Chapter 13 plans run for three to five years, depending upon many factors, including your income, living expenses, the number of people in your household, the type of your debts and the amounts you owe.
The new Federal Bankruptcy Laws are complicated, and you should consult with an experienced bankruptcy attorney whose practice concentrates in bankruptcy law, before you make any decisions regarding your legal affairs.
To determine which type of bankruptcy is most appropriate for you requires an involved investigation into your financial affairs, including your income (now and over the last several years), the members of your household, and the property you own now and have owned over the last 10 years. The new bankruptcy laws have made this even more complicated so I urge you to only seek counsel from attorneys concentrating in the practice of bankruptcy law.
Any bankruptcy filing will stop creditor harassment and collection activities, but you must be sure you are filing under the correct chapter and that all your options have been explained to you.