Chapter 13 Bankruptcy
The Bankruptcy Process
The Colorado bankruptcy process is designed to help consumers and businesses address their debt under the protection of the United States Bankruptcy Court. There are two options for most individuals: Chapter 7 (Liquidation) and Chapter 13 (Reorganization). Each Chapter has benefits and drawbacks. An experienced bankruptcy attorney can help you determine which route is best for you to protect your car, house, and other assets.
In 2005, Congress amended the bankruptcy code to limit the availability of bankruptcy relief. The procedures were made stricter and additional requirements were added that must be met before a discharge can be entered. After these changes, it has become even more difficult to successfully navigate the system without the aid of experienced counsel. We can help you protect your property and ensure that the process proceeds as smoothly as possible.
What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy refers to the corresponding section of the United States Bankruptcy Code that has to do with liquidation. In a Chapter 13 case, a plan is proposed whereby you make payments to the Chapter 13 Trustee for a period of between 36 and 60 months. These payments are used to pay debts in a prescribed order. At the end of the plan, if there is not enough money to fully pay all of the debts, much of the remaining debt is discharged just like it would be in a Chapter 7 case. A Chapter 13 case is available to people who cannot file under Chapter 7 because they have already received a discharge within 8 years or because their income exceeds the limits for a Chapter 7 filing.
For most Chapter 13 cases, only a portion of what you currently owe to your creditors is paid over time by making regular monthly payments to a single Colorado bankruptcy trustee, who then pays your creditors a portion of what is owed, according to the priority set in the Colorado Bankruptcy Code. You only pay back what you can afford.
A Chapter 13 case can address debts that cannot be addressed in a Chapter 7 filing. You can stop foreclosure and catch up the amount you are behind on a mortgage over the course of the plan. You can pay off car loans through the plan at a reduced interest rate. You can catch up on overdue taxes through the plan without additional penalties and interest. Under the right circumstances, you can remove second or third mortgages from your house.
The Chapter 13 process has many benefits, but it is almost impossible for a novice to successfully navigate the system and get a plan approved. An experienced attorney can help you ensure that the process goes as smoothly as possible and help you protect as much of your property as possible. Call us and let’s get started working on your fresh start.