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Chapter 13 is often called the "wage earner" bankruptcy because it requires some payment on your debt, which is determined by what you can afford, and not by your creditors or by the amount you owe.
One of the biggest misconceptions about Chapter 13 bankruptcy is that it forces debtors to pay off all of their unsecured debt. It does not, but it does require debtors to pay as much as they can afford which is NOT determined by what your creditors want you to pay or how much you owe them. If you have decided to utilize the services of a consumer credit counseling service, keep in mind that you may be much better off consolidating your debt under Chapter 13 of the United States Bankruptcy Code. You set the plan approved by the Court and make payments pursuant to a Court order that stops interest for unsecured creditors, stops late fees and stops harassing telephone calls.
The most common reason people file a Chapter 13 bankruptcy is that debtors have a pending foreclosure because a bank refuses to work out a reasonable repayment plan. A Chapter 13 bankruptcy filing stops the foreclosure process and forces the bank to accept back-due mortgage payments over a 3 to 5 year period. At the end of the repayment, debtors are issued a court order discharging their debts. While Chapter 13 is a far more involved process than a Chapter 7, it will discharge debts that Chapter 7 bankruptcy will not, and sometimes it is the only way for people to protect their home or other assets from their creditors.
Filing Chapter 13 bankruptcy has several distinct advantages over Chapter 7 – but you must fully understand what you are agreeing to.
Chapter 13 allows debtors to protect personal property such as a home or automobile from foreclosure or repossession. Debtors must agree to repayment terms and make timely payments throughout Chapter 13 plans. Filing under Chapter 13 also allows the rescheduling of debts and they are extended over the life of the plan. Choosing this option may provide debtors with lower payments, thereby enabling them to complete loan repayments. This is especially helpful when mortgage lenders refuse to work with debtors to restructure existing loans prior to filing.
One of the biggest advantages of Chapter 13 in the current real estate market is that it sometimes permits homeowners to strip off 2nd or 3rd mortgages from their home and treat them like credit card debt. This can be a significant advantage for some homeowners who are struggling to make their mortgage payments.
Filing Chapter 13 also extends some protections to co-signers who may be liable with the debtor for ‘consumer’ debts.
Lastly, debtors in NH filing bankruptcy under Chapter 13 make all plan payments to a Chapter 13 Trustee who then distributes the payments to the respective creditors. This process strips the debtor of any contact with the creditor and further protects them from harassment.
All financial requirements are disclosed upfront. We will walk you through the entire process. There will be NO surprises and no mounting fees. The estimate we provide includes all legal fees, court costs and associated fees.
Our practice area reaches throughout New Hampshire and Massachusetts.
The information contained here is for educational purposes only and it is not intended as legal advice nor does it constitute the establishment of an attorney-client relationship. You should consult a bankruptcy attorney for specific advice about your situation.