Chapter 13 Bankruptcy Attorney in Bowling Green, KY

Chapter 13 provides for an adjustment and reorganization of your debts. In Chapter 13, you develop a repayment plan that allows you to comfortably pay off your existing debts from available income over a three or five-year period. All of your debts are brought together under one plan, and your creditors are required to accept the terms of an approved plan. Some of your debts may be adjusted under the plan, so that you do not have to pay off the entire amount.

Chapter 13 may sound like debt consolidation, but there are important differences between Chapter 13 and a debt consolidation outside of bankruptcy. Any savings that occur from a debt consolidation are treated as taxable income, but that is not the case for an adjustment of debts under Chapter 13. The payoff of your debts typically goes quicker with Chapter 13 as well. Debt consolidation tends to string out the repayment over a longer period, so there is no actual savings in the long run, while in Chapter 13 your bills may actually be lowered. Finally, a Chapter 13 can protect your home, car and other valuable property, while a debt consolidation may require you to put up property as collateral or security, and you can lose those assets if you fail to stick to the terms of the consolidation plan.

Chapter 13 has advantages over Chapter 7 as well. Both Chapter 7 and Chapter 13 invoke the automatic stay which puts a stop to collection efforts by your creditors; in Chapter 13, this automatic stay also keeps creditors from going after any co-signers on a loan, which can be very important to protect friends and family members. Also, an economic means test is not required for Chapter eligibility as it is for Chapter 7. Finally, Chapter 13 does not require any liquidation of assets, so you don't have to worry about whether or not your property is exempt. If you have a steady income and want to make sure you keep your property, a Chapter 13 wage earner's plan may be the solution to your financial troubles.