Moreover, in the vast majority of Chapter 13 Bankruptcy cases, your payment is based on what you can afford to pay, and whatever debt doesn’t get paid off at the end of 3-5 years is “discharged” (wiped out) tax-free, forever. Suppose you owed 100k in credit card debt. We file a Chapter 13 Bankruptcy for you where your plan payment is $500 per month for 5 years. You pay a total of $30k into the plan. You ask, what happens to the remaining 70k that is left unpaid? That $70k left unpaid is “discharged” tax-free forever at the end of the plan.
Chapter 13 Bankruptcy is also a tool we can use to cure mortgage arrears or vehicle arrears. Suppose you have a foreclosure sale set for 3 weeks from now. We can file a Chapter 13 Bankruptcy, stop the foreclosure sale, and cure the mortgage arrears throughout a 3-5 years plan.
Nevertheless, the basic idea in a Chapter 13 Bankruptcy is this: your family gets to eat first, and creditors last. While in Chapter 13 Bankruptcy, you are protected from your creditors. No creditor can garnish you or collect from you at all. The payment you make back to creditors is paid to a Chapter 13 trustee who “disburses” your payments to creditors based on a plan that is set up and confirmed by the court.
If you have the ability to make a payment back to your creditors, chances are you will be required to file a Chapter 13 Bankruptcy versus a Chapter 7 Bankruptcy.
When the time is right, when you are ready to get your life back, reach out to Minnesota’s most kind and helpful bankruptcy law firm by reaching out to www.lifebacklaw.com now. You will be so thankful you did.