CHAPTER 13 is the section of the US Bankruptcy Code that allows individuals in the United States to reorganize their finances. If you are having difficulty paying your debts (credit cards, medical bills, personal loans, taxes, late mortgage payments and property taxes- all kinds of debts) due to insufficient income, don’t despair. Chapter 13 may give you the relief that you need so that you can get back on track as quickly as possible. Let me explain.
We all know how difficult it is to catch up once you start falling behind on debt payments. If you’ve experienced a reduction in income (example: reduced income from employment – or business, if you’re self-employed), Chapter 13 allows you to pay back your creditors over a 3-5 year period based only on the amount of your surplus income every month, not based on how much you owe. In Chapter 13, you also don’t need to worry about losing any assets you may have because you will keep everything and lose nothing. And if you are in business, you will be allowed to continue running your business as usual.
Any type of bankruptcy filing, including Chapter 13, immediately stops all collection actions against you. That means no more annoying creditor calls, collection letters and no marshals at your door. A lot of people in debt are afraid to even answer their phone or open their mailbox because they don’t know how to respond to bill collectors who are harassing them for payment.
If you are about to lose your home in foreclosure, Chapter 13 also allows you to keep your home while including all your back mortgage payments in your debt consolidation. You pay zero percent on credit cards and all unsecured debts and in most cases, the amount you owe on all these debts are significantly reduced, sometimes to zero, depending on your income. The portion of your unsecured debt (or all of it) that is not paid through your Chapter 13 plan is wiped out at the end of your repayment plan.
Once the court approves your proposed Chapter 13 plan, there is nothing more that creditors can demand of you. They are bound by the terms of the approved plan and cannot ask for more money. Your bankruptcy attorney can review your monthly living expenses with you, analyze your income and help you propose a realistic payment plan that you can afford.
In most cases, Chapter 13 is a far better alternative than trying to pay debts on your own or hiring a debt management company. This is because in Chapter 13, you cannot be sued by your creditors as long as you remain under court protection. And if you are being represented by an attorney, all creditor communications go to your attorney so that you do not have to deal with your creditors directly. Warning: You may see a lot of companies promoting “debt settlement or debt management services”. They usually tell you that their services are better than filing for Chapter 13 because you can avoid bankruptcy and it looks better on your credit. Don’t fall for this lie. A lot (not all) of these companies are scammers who tell you want you want to hear, take your money and then fail to deliver on their promises. They often tell you that they have “lawyers” on staff that can defend you if you are ever sued by creditors. The reality is that they don’t and if you end up hiring one of these companies, you will be in worse financial shape than before. They will take your money most of the time and end up doing nothing. I know, because a lot of people who have come to my office tell me about their unpleasant experiences with a lot of these companies.
I offer a free office consultation to help you with debt problems if you are struggling financially and don’t know what to do. Call Toll-Free 1-866-477-7772 to schedule an appointment to see me. I have offices in Los Angeles, Cerritos, Pasadena & Valencia.
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None of the information herein is intended to give legal advice for any specific situation. Atty. Ray Bulaon has successfully helped thousands of clients in getting out of debt. For a free attorney evaluation of your situation, please call Ray Bulaon Law Offices at TOLL FREE 1 (866) 477-7772.
