CHAPTER 13

A Chapter 13 bankruptcy is best for people with steady income, who want to keep their homes which they are behind on and other large assets. Chapter 13 bankruptcy establishes a reasonable monthly payment for the debtor to pay to the bankruptcy trustee. The trustee then distributes this payment to the debtor's creditors and the rest of the unsecured debt is forgiven (discharged). As with Chapter 7, certain types of debts (such as taxes, student loans, and government fines) cannot be discharged. However, most of these can be included in a Chapter 13 plan, so that when the payment plan is complete you may owe little or none of these debts.

STOP HOME FORECLOSURES
Chapter 13 bankruptcy can also be used to stop home foreclosures, and gives you three to five years to catch up on your back house payments.

STOP REPOSSESSIONS
Similar to stopping home foreclosures, Chapter 13 bankruptcy can also be used to stop repossession, and gives you three to five years to catch up on your back car payments. Also, you may be able to lower your automobile, mobile home, and furniture payments in a Chapter 13 bankruptcy.

REPAY TAXES
Chapter 13 bankruptcy is often used to pay IRS taxes that would not be eliminated in a Chapter 7. You are allowed to pay the IRS with a monthly payment that you can afford to make. The IRS cannot garnish your bank account, attach your wages, call you at work, or put a lien on your property.

CHAPTER 13 vs. DEBT CONSOLIDATION
Some people think that Chapter 13 bankruptcy is just like debt consolidation or credit counseling. However, debt consolidation lacks the power to tell your creditors the amount they will be paid and when. These types of repayment plans, only "ask" your creditors to lower their interest rates. Credit counseling plans are "voluntary" for your creditors, who can choose to stop participating at any time, and may even choose to file a lawsuit against you!

On the other hand, a Chapter 13 bankruptcy plan is approved by the court, which means that your creditors must agree to the plan. Also, a Chapter 13 generally only requires debtors to repay a small portion of their total debt, usually at a much lower monthly cost than with debt consolidation.

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