What happens in a bankruptcy Chapter 13
Chapter 13 bankruptcies are typically 36 to 60 months cases that result in a monthly payment to the bankruptcy court trustee to pay some, but typically not all, of your debts. At the conclusion of the case, the remaining debts that can be permanently eliminated are permanently eliminated.
Chapter 13 is used for a lot of reasons where Chapter 7 is not a good option. Some of the reasons to file a Chapter 13 bankruptcy instead of a Chapter 7 bankruptcy include:
– To pay back mortgage arrearages
– To lower the interest payment on your car payment
– To pay back taxes owed
– To pay back spousal or child support arrearages
– To file bankruptcy when unable to file Chapter 7
– To use Chapter 13 like a consolidation loan
– To file bankruptcy and not lose assets that would be sold in Chapter 7
– To reinstate your driver’s license suspended for traffic tickets
– To eliminate a second mortgage on real estate
– To ‘cram down’ certain liens to a lower value and pay the lien
– To eliminate martial debts not in the nature of support or alimony
– To stop a foreclosure
– To pay bankruptcy attorney fees
– To resolve a cross collateralization issue
– To fend off nondischargeable debts for the duration of the Chapter 13 case – 36 to 60 months typically.
– To feel like you are paying some of your debts.
The process of Chapter 13 results in a monthly payment to the bankruptcy trustee in your case. This payment is then divvied up by the court among everyone else who is entitled to some portion of the payments. At the conclusion of the case, the rests of your eligible debts are eliminated permanently. Meanwhile, during the case, no creditors can collect against you, including student loan creditors.