What Is Chapter 13?

Chapter 13 is, in essence, a repayment plan similar to consumer credit counseling, in which you restructure your debt but with the power of bankruptcy behind it. People facing foreclosure on a property they want to keep are good candidates for Chapter 13. For example, if you are behind on mortgage payments due to job loss or illness and now you're back at work but can't dig out of the financial hole, a bankruptcy can put a "stay" in place (creditors have to stop calling, and foreclosures and repossessions have to be stopped). Your car, child support, mortgage, and taxes can now be paid back by rolling all payments together and making one payment spread over five years so you can get caught up and start making regular payments. If you have owned your car for over 910 days, and you owe more than the car is worth, you can pay the amount of the car's worth and keep the car, even up to ten days after repossession. In Texas, you can get your car back, and the payment plan won't start until thirty days after filing for bankruptcy.

 

What Is the Difference between Chapter 7 and Chapter 13?

The two common types of bankruptcy for people (not businesses) are Chapter 7 and Chapter 13. Both help you remove the financial strains of creditor harassment, foreclosure, and the embarrassment of not being able to pay your bills while giving you the ability to put food on the table, clothe your children, and get a fresh start.

 

An experienced bankruptcy attorney can help you decide which chapter you should file under based on your personal situation. Don't try to do this on your own; it's a fairly complicated process. It is not shameful to file for bankruptcy-if you are in a situation in which some unexpected hard times have put you behind on payments on property you want to keep, Chapter 13 can help you catch up on payments and keep your property.