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Email: james@jamesomaralaw.com
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James M. O'Mara
Chapter 13 bankruptcy is designed for individuals with regular income who can pay back part of their debts through a structured repayment plan. If you have sufficient disposable income, Chapter 13 allows you to reorganize your debt and spread your payments over a period of 3-5 years. This option is particularly useful if you're trying to save your home from foreclosure or your car from repossession. For example, if you've fallen behind on your mortgage or car payments, Chapter 13 can help you catch up by allowing you to make up the missed payments over the life of the bankruptcy plan, while simultaneously keeping up with your current payments.
One of the major benefits of filing for Chapter 13 bankruptcy is the ability to keep all your assets, including those that might be considered non-exempt. This means you won’t have to sell your property as you might in Chapter 7 bankruptcy. Additionally, Chapter 13 can provide significant relief such as the possibility of eliminating a second mortgage or home equity line if the court determines that your home is worth less than you owe on your first mortgage. Also, including your IRS debt in the Chapter 13 plan can prevent new tax liens and give you the opportunity to pay off tax debts over the duration of your repayment plan, protected from further IRS collection actions.
When you file for Chapter 13 bankruptcy, you submit a plan to the court detailing how you will pay off your debts over a 3-5 year period. This plan must be approved by the court and typically prioritizes secured debts like your home and car. This process not only halts any ongoing foreclosure or repossession actions due to the "automatic stay" but also allows you to manage other unsecured debts effectively. By successfully completing the payment plan, you maintain possession of your property and gradually improve your financial stability.
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