Chapter 13 Bankruptcy: The Basics

Written by Wesley Scott | November 25, 2021 at 11:30 AM

Chapter 13 Bankruptcy is a government sponsored debt consolidation plan with several favorable twists for debtors.

First, the plan duration is typically 3-5 years and your payment is typically what you can afford to pay to a trustee after you have paid your other reasonable and necessary expenses. For example, if you have $500.00 a month in disposable income, then $500.00 a month is your payment. If your income is over the median income in Minnesota, you are required to do a 5 year plan. So, in this example, you would pay $500.00 per month for 60 months for a total of $30,000.00.

Now let’s assume you owed 100k in credit card debt. If you pay 30k into the plan, you will pay creditors approximately (assumes no other variables) 30 cents on the dollar. Not bad. The balance of the 70k would be discharged, tax free, forever.

Second, the advantage of a Chapter 13 Bankruptcy then is debtors often pay much less than the full debt they owe creditors; and they do so tax free.

Third, unlike traditional debt consolidation where one creditor can poop in the punch bowl and ruin the entire plan by not agreeing to the plan, and they garnish our wages, in a Chapter 13 Bankruptcy ALL creditors must comply with the terms of the plan. Plus, the automatic stay prevents most creditors from garnishing your wages or freezing your bank accounts. In other words, there is peace in the valley whereas in traditional debt consolidation creditors can continue to collect from you regardless of what the repayment plan proposal looks like. Not so in a Chapter 13 Bankruptcy.

CALL NOW FOR A FREE STRATEGY SESSION FROM A MN BANKRUPTCY LAWYER AT LIFEBACK LAW FIRM

When the time is right, or when you are ready, reach out to Minnesota’s largest bankruptcy website by going now to www.lifebacklaw.com. You will be so glad you did.

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