A successful Chapter 13 plan provides asset protection, and restructures your debt by consolidating it into a monthly payment that is less than what you currently spend.
When you file Chapter 13, you make one payment each month to the Trustee. That payment will satisfy your obligation on all of the debts that are included in the case. In that sense, it works much like a debt consolidation.
When you file the case, you and all of your assets are protected from your creditors. Chapter 13 stops:
Chapter 13 allows you to restructure debts with collateral, including auto loans. The debt is included for payment through the case, so you will not have to make any more direct payments on those loans. Your attorney can set the Chapter 13 plan up to reduce the interest rate to a reasonable amount, and extend the payment term over the life of the chapter 13 plan.
In most instances you are not required to repay all of your unsecured debt – credit cards, loans, medical bills, etc. The creditor is included for payment in the case, and files a claim for the amount owed. The creditor receives a certain percentage of the claim over the life of the case. The portion of the claim that does not get paid is discharged when the case is completed.
In sum, Chapter 13 allows you to restructure the important terms of your debts – the amount that you repay, the interest rate and the time for paying can all be adjusted to give you relief from your creditors.
When you complete your Chapter 13 payment plan you will receive a bankruptcy discharge. If a debt is discharged, you no longer have an obligation to pay the debt, and the creditor may not make any effort to compel you to repay. In simple terms, the debt is wiped out.
Chapter 13 discharges almost every kind of debt. There are a few exceptions, so it is important to hire an experienced bankruptcy attorney who will review your particular debts and draw up an effective payment plan that accomplishes your goals.
If you’re facing huge debt or bills you just can’t pay, Gastin & Hill, Attorneys at Law can help. Call at 912-232-0203 or contact us online for your free initial consultation to learn how we can help you get your financial life back on track.