Wednesday, November 2, 2016
Do I Have To Pay My Debts In Full During A Chapter 13 Bankruptcy?
Part of the benefit of filing for the protection of bankruptcy is that you no longer have to pay all of your bills. When you can reduce the amount of your monthly obligations by filing bankruptcy, you are able to free up money to put towards other needs. But there might still be some things that you have to pay for, even if you have filed bankruptcy. For example, if you want to keep your house or car, you do have to continue making these payments. However, you might be able to pay a reduced amount for some of these things, and it all depends on what type of bankruptcy you file.
In a Chapter 13 case the debtor is required to propose a plan of repayment, for all of their debts. This is accomplished as follows:
• A Chapter 13 Plan is prepared, and in that Plan the debtor sets forth how much they intend to pay for certain things. Not all debts will have to be paid back in full, and this is where a real savings can be realized.
• You have the option of paying only the value of your car, rather than the full amount, when you file a Chapter 13 bankruptcy. This is because the Chapter 13 rules allow you to pay only what your vehicle is worth, and at a different interest rate than what your loan provides. You do have to be reasonable with the value you offer, or the creditor can object to your proposal. If that happens, careful negotiations can result in a lower amount being paid back through the Chapter 13 Plan than what you currently owe.
• Unsecured credit card debts are required to be repaid in a Chapter 13, but not in their entirety. In a Chapter 13 case, unsecured debts are paid a percentage of the amount due. The percentage you pay is determined by the calculations performed when your case is prepared, and is different for everyone that files. Many times, unsecured lenders receive only pennies on the dollar for the balance due.
These provisions of the Chapter 13 bankruptcy rules can really add up to substantial savings. When you are no longer required to pay all of your debts in full, you can save money each month. The money saved can be put towards the debt on things you want to keep, like your house, or can be used in an emergency. Let us help you get a handle on overwhelming debt, by calling today to talk to us about your needs.
For more information about Chapter 13 bankruptcy, call us today or reach us online at www.law-ri.com. We offer appointments at multiple locations for your convenience and can schedule a time to visit with you today.