Colorado Bankruptcy Attorney Matt McCune briefly explains Chapter 13 Bankruptcy in this short video.
TRANSCRIPT OF VIDEO:
Let’s talk about Chapter 13 bankruptcy. Chapter 13 is a fairly complicated chapter of the bankruptcy code. The bankruptcy code calls chapter 13 a “reorganization.” Chapter 13 has incredible value for people that are struggling with their debts, but it also does come at a price because in Chapter 13 you have to make monthly payments to a Chapter 13 bankruptcy trustee. Chapter 13 is a repayment plan at heart although you rarely if ever pay all of your debt back, you just get to reorganize your financial life. Those payments can last for three to five years. Chapter 13 is my personal favorite chapter of the bankruptcy code because it provides so much value to those who are struggling with their debts. For some people Chapter 13 might be the only option due to a couple factors. The best thing that we can do for folks is that through Chapter 13 we can help you save your home from foreclosure if you fall behind on your mortgage because we can cure those arrears through the plan. We can help you save your car, sometimes we can get you a better deal on your car. Pay less on the car, lower the interest rate, wipe out your other bad debt…not a bad deal. If you are struggling with taxes, Chapter 13 is also a good option. If you have some assets that wouldn’t otherwise be protected in bankruptcy, as opposed to losing them in another bankruptcy chapter, Chapter 13 allows you the option of keeping those assets. You get to keep control over some non-exempt assets in Chapter 13. In Chapter 13 you do have to have some source of income to be eligible, because you are committing to a repayment plan. Sometimes Chapter 13 doesn’t work, often because it lasts so long. People lose their jobs, they are then unable to afford the payments and then we can at that point explore potentially converting a Chapter 13 to a Chapter 7 bankruptcy, if that makes sense. Sometimes a Chapter 7 case is not going well and in some situations that case can be converted to a Chapter 13. The process of Chapter 13 can be lengthy. You file the case, a month later there is a creditor meeting, and then after that there is what is called a confirmation process. Basically what my firm is trying to do is get a plan confirmed (approved by the Bankruptcy Judge) to the best terms possible for the debtor. That process can take about five to six months. Once you get your plan confirmed, as long as you honor the terms of that plan, your discharge is on the horizon. Now it could be three to five years down the road and that’s the main negative to chapter 13. However, the benefits far outweigh the negatives for those debtors where chapter 13 makes sense. This is a very basic overview of Chapter 13 and not meant to be complete legal advice for your unique situation. You can always call us and we never charge for a phone consultation. You can talk to myself or any of my attorneys for free. We also provide a fair amount of tips and tricks on our social media. You can follow me on Facebook and Instagram @mccunelegal. Thank you!