Friday, September 2, 2016

Three Characteristics Of A Typical Chapter 13 Debtor

Not everyone who files for bankruptcy files the same type of case. There are two types of consumer bankruptcy filings, and they are classified as chapters. A Chapter 7 is a liquidation of your debt while a Chapter 13 is more like debt consolidation. In a Chapter 13 the debtor proposes a play of repayment, and once the terms of that plan are acceptable to the creditors and the trustee, the Court will approve the plan and enter an order confirming the proposal. Once the plan is confirmed, the debtor will make one monthly payment to the Chapter 13 Trustee and the Trustee will disburse the funds to the creditors pursuant to the terms of the plan.

Three characteristics of a typical Chapter 13 debtor include a person or couple who:

         Have enough income each month to pay all of their secured debts as well as pay something on their unsecured obligations. The amount of money available to put towards unsecured debt does not have to pay the debt in full, or even be the monthly payment amount the creditor seeks, there just has to be some income at the debtor’s disposal to put towards the unsecured debt.

         Has a secure job with a steady paycheck, and so is able to make a monthly plan payment to the Chapter 13 trustee on a regular basis.

         Is not significantly behind on the majority of their monthly obligations, but may be having to make a choice as to which unsecured bills get paid on time and which have to wait.

Chapter 13 can help a debtor reorganize their debt, and can also allow for repayment on some secured debts at a lower amount than the current balance. It might also be possible to propose a Chapter 13 plan that contains lower interest rates than what the contract or loan includes. These two things help out by reducing the payment amount and making it easier for the debtor to meet all of their obligations. If you are experiencing financial difficulty, call us today to find out what type of case is right for your circumstances.

For more information about chapter 13 bankruptcy, call us today or reach us online at We have multiple locations to serve you and can schedule a time to meet at the office most convenient for you.

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