Chapter 13 bankruptcy is a court supervised repayment plan, consolidating your debts into one payment that is administered through a court appointed Chapter 13 Trustee. The Court has power to force your creditors into one affordable payment. Your payments made to the Chapter 13 Trustee are distributed to your creditors according to the Chapter 13 Plan, created by your attorney, and approved by the court.
Chapter 13 is designed to help people save their home and car and stop foreclosures or repossessions. It is designed to pay back your creditors over time, to pay off the debts you cannot wipe out in a Chapter 7 such as student loans, taxes, past due mortgage payments or traffic fines. We can also use a Chapter 13 to protect a co-signer from creditor harassment.
Chapter 13 can consolidate all of your debts (including credit card balances) and often you will not have to pay interest, or even pay back the debts in full. This can save you money.
Filing a Chapter 13 will stop a foreclosure in the State of Washington as long as you file the case PRIOR to the foreclosure sale date.
Filing a Chapter 13 can stop your vehicle from being repossessed; we can even get a vehicle returned after repossession in some situations (for example, if you need the vehicle to get to work).
It is important that you discuss all of your options and your entire financial situation with an experienced attorney before you make the final decision as to which path you should take. Often refinancing your home can be an option to avoid bankruptcy, but you must be cautious of someone taking advantage of you. Sometimes refinancing is not possible nor a good idea. The danger of refinancing is that you pay off your credit cards with a new loan, secured by your home, but once again you run up those cards so you then owe more on your mortgage and all the credit cards. Be careful, especially on interest only loans, adjustable rate mortgages and balloon payments.
Chapter 13 plans typically run for three to five years, depending on many factors, including your income, living expenses, your household size, the types of debt you have and the amount you owe.
The new Federal Bankruptcy Laws are complicated, and that is why I urge you to consider an experienced bankruptcy attorney only. There are many ways an attorney can determine how the bankruptcy laws can work for you. You should consult only with an attorney who practices bankruptcy law before making any decisions regarding your financial problems.
To determine which type of bankruptcy is most appropriate for you will require an involved investigation into your financial affairs, including your income (now and several past years), the members of your household, and the property you own now and have owned over the last 10 years. The new bankruptcy laws have made this even more complicated so I urge you to only seek an attorney concentrating in the area of bankruptcy law. The new laws have many new rules and deadlines that are not known to the general practitioner.
Any bankruptcy filing will stop creditor harassment and collection activities, but you must be sure you are filing under the correct Chapter, that all of your options have been explained to you and that your attorney has reviewed your case in sufficient detail to provide you with all of your options.
Call us for a free consultation at (425) 771-8230
to find out more about our practice areas.