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Howard A. Wurman Attorneys and Counselors at Law

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Chapter 13 Bankruptcy, known as a "wage earner plan," is a different type of Bankruptcy that generally allows the debtor to keep most or all of their property if they are willing to repay creditors to the extent they can afford to do so over a three to five year period.

The Chapter 13 Bankruptcy Code is designed to enable individual debtors under court protection and supervision to apply a portion of future earnings to the payment of all or a portion of their debts over an extended period of time. The debtor is protected from creditors by an automatic stay while a plan of repayment is developed and carried out. Chapter 13 Bankruptcy was intended to give the wage earner a reasonable opportunity to arrange installment payments out of future income so that creditors would receive more money than they otherwise would receive in a straight liquidation of their assets under a Chapter 7 Bankruptcy.

The Advantages of a Chapter 13 Bankruptcy

Chapter 13 offers individuals a number of advantages over liquidation under a Chapter 7. Perhaps most significantly, Chapter 13 offers individuals an opportunity to save their homes from foreclosure. By filing under this Chapter, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time. Nevertheless, they must still make all mortgage payments that come due during the Chapter 13 plan on time. Another advantage of the Chapter 13 is that it allows individuals to reschedule secured debts (other than a mortgage on their primary residence) and extend them over the life of the Chapter 13 plan. Doing this may lower payments.

Finally, a Chapter 13 Bankruptcy acts like a consolidation loan under which the individual makes the plan payments to a Chapter 13 Trustee who then distributes payments to creditors. Individuals will have no direct contact with creditors while under the protection of a Chapter 13 plan.

At Wurman Law Group, P.C., we understand that if you are considering filing for bankruptcy, you undoubtedly will have many questions. Please contact our office to discuss whether a Chapter 13 Bankruptcy is right for you and/or your family.

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