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A Chapter 13 Bankruptcy Lawyer Can Answer Your Questions About Reorganizing Your Debts

    Chapter 13 Bankruptcy LawyerAs a chapter 13 bankruptcy lawyer, we are regularly asked about reorganization, as in, “What is it?” No one really uses this term in everyday life, so it can seem more complicated than it actually is. Reorganization refers to finding a better way to pay for your debts. Since you cannot afford your current monthly payments, a reorganization plan identifies what you can afford to pay and then determines how much money each one of your creditors will get out of that monthly sum and in total payments. This is a formal, legal way to negotiate with your creditors to obtain a monthly debt schedule that you can afford, while continuing to meet your other financial obligations.

    Why do people need to file a chapter 13?

    If you cannot afford to make your monthly debt payments, a chapter 13 can help you by creating a formalized budget. The plan you submit to the court has to include information on what you pay for housing, groceries, transportation, utilities, daycare, child support, etc., so it is very comprehensive. The money you have left over after paying these living expenses will be what you have available to pay creditors. Normally, creditors can be so demanding that they practically force you to pay them first, leaving not enough money to pay the electric bill or your auto insurance. When you file a chapter 13, the process is turned upside down so your living expenses are always taken care of first.

    Additionally, people work with a chapter 13 bankruptcy lawyer because it can be difficult to get creditors to take you seriously. Since this type of plan allows for some payments to be made, creditors could agree to these terms on their own, but most do not. Once you hire an attorney and file for bankruptcy, they will be forced to abide by the court’s decision.

    Can you make the debt collectors stop calling me?

    In theory, yes. Once you file for bankruptcy, all collection actions are supposed to stop. Your creditors are not supposed to call and harass you or demand payment because all your assets are supposed to be preserved for the estate.

    Will I lose my home?

    Typically not. You should be able to keep your home in a chapter 13 because you are reorganizing, not liquidating. You do, however, need to make your monthly mortgage payments. If you do not, the bank still has the right to foreclose. However, if you are currently behind and afraid of losing your home, filing for bankruptcy can give you the opportunity to pay back what you owe over time instead of needing to make an immediate lump sum payment.

    Is there anything I can try other than filing bankruptcy?

    Yes; while we are an experienced chapter 13 bankruptcy lawyer, we can also negotiate with your creditors ahead of time. If they will agree to a modified repayment plan, you may be able to avoid the bankruptcy process.

     

     

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