A Chapter 13 Bankruptcy, sometimes referred to as the wage earner’s plan, was designed for the debtor who has a regular stream of income and who can afford to pay back some or, in certain situations, all of their debts. For those debtors who are above the median income level in the State of Florida and do not qualify for a Chapter 7, a Chapter 13 Bankruptcy is another great option, especially if you are looking to save your home.
In a Chapter 13, debtors are required to pay back all disposable income to their unsecured creditors over time, normally between three to five years. We work closely with our clients to calculate their monthly income and deduct all expenses to develop an affordable plan to repay their creditors, as well as determining the appropriate length of the repayment plan. After we put together the repayment plan we are required to submit the plan to the Bankruptcy Trustee for approval at a confirmation hearing. The Trustee is responsible for making sure the repayment plan abides with Federal Bankruptcy Code and is a fair repayment plan based on the debtor’s income and expenses. Once the plan is confirmed and all payments are successfully completed, you receive a discharge of the remainder of your debts.
For example: If a debtor only has $50.00 per month leftover after calculating their income and expenses, that is what would be required to be paid to the unsecured creditors for the duration of the plan, then the remaining amount of all unsecured debts are completely discharged. A Chapter 13 is also a smart choice for debtors that own more valuable assets than the usual Chapter 7 debtor, as you can keep all of your assets. Similar to a Chapter 7, a 13 also protects debtors from pending lawsuits, garnishments and is a powerful tool in dealing with mortgage lenders.
One of the newest programs a Chapter 13 offers is the Mortgage Modification Mediation Program. Trying to obtain a mortgage modification can be tedious, to say the least, but when the Federal Bankruptcy Court is the overseer the banks are on their toes at all times, making the process far more streamlined and with much more success than outside of a bankruptcy.