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Chapter 13 Bankruptcy

Facts About Chapter 13

When most people throughout Metro Detroit think about bankruptcy, they are either thinking of the kind of bankruptcy a major business might file (Chapter 11) or the kind of bankruptcy in which debt is eliminated and assets are protected for individuals (Chapter 7). But there is another kind of bankruptcy that provides many benefits not available under other chapters of bankruptcy. That other kind of bankruptcy is found in Chapter 13.

What Can You Do When You File A Chapter 13 Bankruptcy?

In a Chapter 13 bankruptcy, the law enables you to accomplish a number of goals, such as:

  • Save your house: If you are behind on your house payments, Chapter 13 allows you time to catch up and stops foreclosure proceedings.
  • Save your car: If you are behind on your car payments, Chapter 13 allows you to catch up on those, too, often helping you prevent repossession.
  • Make a payment plan to your creditors: Depending on your income level, you can pay creditors a certain amount for three to five years. Whatever is left owing to your creditors at the end of your repayment period often gets eliminated just like in a Chapter 7 bankruptcy.
  • Eliminate second and third mortgages: If your house is worth less than what you owe, you may be able to get rid of additional mortgages.
  • “Cram down” your car payments: Instead of paying your normal loan amounts, Chapter 13 may allow you to pay back only what the car is worth.

How is Chapter 13 Bankruptcy Different Than Chapter 7 Bankruptcy?

There are some key differences between the structure of a chapter 7 bankruptcy and that off a chapter 13 bankruptcy.  Specifically, they are:

  • A chapter 7 bankruptcy is more suitable for an individual with overwhelming debt obligations and no clear path for how those debts will be satisfied. As such, a liquidation of their debt in chapter 7 bankruptcy would be most suitable.
  • A chapter 13 bankruptcy is also for an individual who faces significant debt obligations. However, this type of bankruptcy is more suitable for someone who has the income to create a foreseeable path of repayment.
  • In addition, the debts owed in a chapter 13 bankruptcy are reduced by a percentage deemed by the court and organized in a structure approved by the court. This allows the debtor to still repay a portion of their debt to their creditors while remaining under the protection of the bankruptcy court.

How Do I Know What Type of Bankruptcy Best Fits My Financial Situation?

We approach each bankruptcy case from the view that they are all unique and require the proper due diligence so that the debtor uses the right type of bankruptcy structure to gain a more healthy financial footing.

Top Considerations for a Chapter 13 Bankruptcy

  • A review of your bankruptcy means test shows that you have the ability to pay back some of your debt obligations
  • You possess income that would allow you to pay back a portion of your debt to your creditors
  • You still desire the protection of bankruptcy court during the repayment process
  • You desire to keep assets such as your home, retirement accounts, vehicles, and more

Top Considerations for Chapter 7 Bankruptcy

  • A review of your bankruptcy means test shows that you no ability to pay back your debt obligations
  • You do not posses the level of income to be considered for a chapter 13 bankruptcy and a more suitable alternative is a debt liquidation in a chapter 7 bankruptcy
  • You seek the protection of the bankruptcy court while keeping important assets such as your home, retirement accounts, and vehicles.

The Types of Debt That Can Be Reduced or Eliminated in the Bankruptcy Process

  • Foreclosure
  • Wage Garnishment
  • Vehicle Repossession
  • Burdensome credit card debt
  • Heavy medical debt
  • Failing business
  • Old tax debt
  • Personal loan debt
  • Delinquent utility bills
  • Unpaid rent from past leases
  • Unsecured short-term loans (i.e. PayDay loans)
  • Civil judgements

When It Comes to Protecting Your Financial Assets in Bankruptcy Experience Matters

Jason Smalarz handled my case and made what could have been a stressful experience as painless as possible. From our very first phone call to the very end, he was incredibly responsive, professional, and thorough. He took the time to explain everything clearly, and everything happened exactly as he said it would—almost to the day.

I couldn’t have asked for a better attorney and would highly recommend Jason to anyone looking for legal representation. He is truly the absolute best at what he does!

Would You Like To Learn More About Chapter 13 Bankruptcy?

Our attorneys invite you to contact our office to schedule a free initial appointment if you would like to learn more about whether or not a Chapter 13 bankruptcy is right for you or not. Please give our lawyers a call at 248-462-7698. If you prefer, you can also contact us by email.

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