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Debt Reorganization And Relief Through Chapter 13 Bankruptcy

Many government contractors in the Washington, D.C., metro area and beyond file for Chapter 13 bankruptcy when they are short of cash while between government contracts. Even if they are soon hired once again, their incomes may not catch up fast enough to get back on track with a regular mortgage and car loan payments.

Once someone falls behind on their mortgage, the lending bank may soon issue a notice that foreclosure proceedings are about to begin or are already underway. Chapter 13 bankruptcy allows many people in such circumstances to save their homes and cars by catching up on past-due payments without the immediate threat of foreclosure and/or repossession.

Chapter 13 Bankruptcy May Appeal To Debtors Whose Income Is Too High For Chapter 7

Chapter 13 is a debt repayment plan for individual debtors. When Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”) in 2005, it limited Chapter 7 filings to debtors whose income minus certain allowed expenses is less than the median income of the state where the debtor resides.

Debtors with above-median incomes are expected to repay at least part of their debts over the course of a five-year repayment plan. This is the heart of a Chapter 13 bankruptcy debt organization plan. The amount repaid in the plan is calculated on a case-by-case basis, but the total is typically a fraction of the debts owed.

In practice, Chapter 13 also provides attractive benefits that entice some debtors with below-median incomes to voluntarily file Chapter 13 instead of Chapter 7. These benefits include the ability to retain valuable property that would have to be surrendered in Chapter 7. Another advantage of a Chapter 13 bankruptcy is the opportunity, at the end of the repayment period, to obtain a discharge of certain remaining debts that have been partially repaid with little or no interest over the five-year period.

Is Chapter 13 Bankruptcy Your Ticket To Manageable Debt Repayment And Relief?

To determine if Chapter 13 is suitable for your financial big picture, and whether it is the best way to resolve your debts, please complete our bankruptcy intake form to contact our office and request a free consultation.

Reach our Herndon, Virginia, law offices by calling us at 703-297-8535 or sending a brief message. If you wish, let us know if divorce is also in the picture. We can advise you on how you and your soon-to-be ex-spouse can come out with the most favorable outcome in a Chapter 13 bankruptcy.