Gary R. Garretson

James M. Durkee

Attorneys at Law

1802 N. Division St., Suite 201, Morris, Illinois

(815) 941-2825

Fax: (815) 941-2840

E-Mail: ggarrets@hotmail.com.

Chapter 13 in detail
Reorganize Your Bills  

         Chapter 13 is often referred to as a court-ordered debt consolidation. Chapter 13 will stop a pending foreclosure or car repossession. It will stop a wage assignment or wage garnishment. It will even prevent the IRS from taking any tax refunds that you are entitled to. In short, a Chapter 13 will allow you some breathing room so you can reorganize your finances.

        In a chapter 13 case you file a ''plan'' showing how you will pay off some of your past-due and current debts over three to five years. The most important thing about a chapter 13 case is that it will allow you to keep valuable property--especially your home and car--which might otherwise be lost, if you can make the payments which the bankruptcy law requires to be made to your creditors. In most           cases, these payments will be at least as much as your regular monthly payments on your mortgage or car loan, with some extra payment to get caught up on the amount you have fallen behind.

        You should consider filing a chapter 13 plan if you:

       (1) own your home and are in danger of losing it because of money problems;

        (2) are behind on debt payments, but can catch up if given some time;

         (3) have valuable property which is not exempt, but you can afford to pay creditors from your income over time. You will need to have enough income in chapter 13 to pay for your necessities and to keep up with the required payments as they come due.

      There are several situations where a chapter 13 is preferable to a chapter 7.

       A chapter 13 bankruptcy is normally for people who have too much income to file a Chapter 7 bankruptcy or have the kind of debt that is non-dischargeable in a Chapter 7 (e.g. certain taxes). Also, people file Chapter 13 because they are behind on their mortgage or business payments and are trying to avoid foreclosure. A chapter 13 bankruptcy allows them to make up their overdue payments over time and to reinstate the original agreement. Also, where a debtor has valuable nonexempt property and wants to keep it, a chapter 13 may be a better option.

       However, for the vast majority of individuals who simply want to eliminate their heavy debt burden without paying any of it back, Chapter 7 provides the most attractive choice.           

Reorganizing your debts

        When you file a Chapter 13, you are consolidating all of your debts into one large debt.  Payments are made either once a month by you to a court-appointed trustee, or are deducted automatically from your paycheck, whichever you prefer. The trustee will then distribute your money among all of your creditors according to a plan that we will help you formulate.

        In a Chapter 13 you only have to pay back what you can afford. This determination is based on your income, your living expenses, the amount of your debt, your assets and types of debt you have.  Chapter 13 can help you deal with recent student loans, recent tax debts, parking tickets and other debts that cannot be discharged in a Chapter 7.

The filing process

        Filing Chapter 13 is very simple. After your case is filed with the court, you will go with your attorney to meet with a representative of the trustee. This meeting takes place about six weeks after your case is filed and is very informal. The purpose of the meeting is for a trustee to go over your case to make sure the plan that we have filed on your behalf is workable. Assuming that the trustee recommends your plan-and he/she almost always does-your case will be set for confirmation in front of a judge. You do not need to be present in court for your confirmation hearing-we will be there for you. Then, all you need to do a make your monthly payment to your trustee. If you prefer, we can arrange for your payment to be automatically deducted from your paycheck.

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Our Attorneys are Admitted to Practice by: Illinois Supreme Court; United States District Court, Central District of Illinois, Northern District of  Illinois (Member Trial Bar); and United States Supreme Court

Disclaimer: The information provided here is to be used as general information only and is not intended to suffice as legal advice upon which you can rely for your particular situation. In the event you have specific questions, please call us or another qualified attorney.

Author: Gary R. Garretson.
Copyright © 2000, 2008 Gary R. Garretson. All rights reserved.
Revised: September 17, 2008