Chapter 13 Bankruptcy

Chapter 13 Bankruptcy
Though not as common as the Chapter 7 bankruptcy case, the Chapter 13 Bankruptcy is an important option to understand. Chapter 13 Bankruptcy can provide protection from debts when someone is not eligible for Chapter 7 Bankruptcy and there are benefits to Chapter 13 bankruptcy that are not available in a Chapter 7 case.

Chapter 13 Bankruptcy is commonly called “Reorganization”. A Chapter 13 Plan takes into account the income less the reasonable and necessary living expenses. The amount left over is called the disposable income. The disposable income is paid monthly to the Chapter 13 Trustee who distributes the funds to the creditors according to the Chapter 13 Plan. The Bankruptcy Code allows that certain creditors can be treated differently than others for purposes of a Chapter 13 Plan. That is why taxes, child support, and payments to cure mortgage and car payment arrears can be paid before the general unsecured creditors. This allows the client the benefit of directing disposable income to areas that are of benefit to the client such as getting caught up on their mortgage if they want to keep their house and paying the nondischargeable portion of taxes.

An experienced attorney like Dennis H. Babiniec approaches every Chapter 13 case on a customized basis for each client. First the economic analysis is done to determine the disposable income available and second, the needs of the client are analyzed to determine how the disposable income can be distributed to creditors under the provisions allowed by the Bankruptcy Code in the way most beneficial to the client. The Chapter 13 Plan is custom crafted to best benefit the needs of the client and assist them in reorganizing their financial affairs.

A Chapter 13 Plan lasts for either 3 years or 5 years depending on whether the income of the client exceeds the Colorado state median income for the client’s size of household. At the successful completion of a Chapter 13 Plan, any debts that remain that are legally dischargeable are discharged or eliminated. So there is the benefit of discharge of the debt that is legally dischargeable at the end of the Chapter 13 case. In fact the type of debts that are legally dischargeable in a Chapter 13 case are broader than what debts can be discharged in a Chapter 7 case.

The fees for a Chapter 13 case start at $3,300.00 + Court filing fees, but unlike Chapter 7 cases, a portion of the attorney fees can be paid out of the disposable income in the Chapter 13 Plan payments. The cost of a Chapter 13 can vary greatly depending on the nature of the provisions and issues that the Chapter 13 Plan is addressing. Cases where second mortgages are stripped away, liens are avoided or other complicated legal issues will cost substantially more than the basic case. The Chapter 13 case does make it possible for the payment of a substantial amount of legal work by using the provisions of the Bankruptcy Code that allow a portion of the attorney fees to be included in the Chapter 13 Plan.

Contact Dennis H. Babiniec P.C. today at 303-451-9110 to schedule your free consultation, or browse our website for more information regarding Chapter 7 Bankruptcy, Chapter 13 Bankruptcy or to read our Bankruptcy FAQs.

If you are looking for information regarding divorce, family law, legal separation or support and custody, please visit our Divorce website.

We are a debt relief agency - a law firm providing legal representation to people who file for bankruptcy relief under the bankruptcy code. The content on this site is intended for general information only and is not to be construed as legal advice. Please consult Dennis H. Babiniec, P.C. for advice specific to your needs.

Dennis H. Babiniec, P.C.  |  Northglenn and Thornton, CO Bankruptcy Attorney  |   BBB Accredited, A+ rating and over 30 years of experience
Bankruptcy, Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, Debt Reorganization  |  Serving The Denver Metro Area, Including Northglenn, Thornton,
Westminster, Broomfield, Commerce City, Federal Heights, Wheat Ridge and Arvada, CO

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