Filing a Chapter 13 Bankruptcy means that a debtor (the person who filed the bankruptcy) makes payments to the court for a certain period of time, after which dischargeable debts are forgiven and the bankruptcy ends. Here are few things to keep in mind as you explore whether it is right for you.
The plan is an agreement with the court to pay a certain amount of money over a certain period of time. This money is paid monthly from wages and annually from tax returns and bonuses. In return the debtor is able to eliminate some debt and control the repayment of other debts. The debtor and creditors must follow exactly what it says in the plan, if either said fails to comply they may be punished by the court.
Your plan will either last a minimum of 36 or 60 months depending on the result of the Chapter 13 Statement of Current Monthly Income and Means Test Calculation. A plan may be extended from 36 to 60 months, but it may not extend past 60 months.
Some Benefits to Filing a Chapter 13 Bankruptcy:
A debtor is able to catch up on back mortgage, car, or child support payments in order to keep their house or license. In some situations a debtor may eliminate a 2nd mortgage or reduce the price they pay for their vehicle. Although taxes and student loans may not go away, filing a chapter 13 bankruptcy can help in repaying them.
Some Risks to Filing a Chapter 13 Bankruptcy:
Filing a chapter 13 bankruptcy is a lot easier than finishing one. There are a lot of changes that can occur over 3-5 years and this can impact a debtor’s ability to fulfill their obligations to the court. As circumstances change for the better, the court may require more money to be paid which can result in a case being dismissed if the debtor does not comply.
There is a lot that can be accomplished in a Chapter 13 bankruptcy. Oregon residents considering filing bankruptcy should contact us for a free consultation to explore it further.