Sometimes called wage earner bankruptcy. A court supervised plan that lets you catch up on what you are behind on, at a pace a court has approved, while creditors are ordered to stand down.
Why people choose it
If your income is enough to make a payment but not enough to catch up on months of arrears all at once, this is the tool built for that gap.
Chapter 13 is longer and more demanding than Chapter 7. It is worth being clear eyed about that going in.
The license problem
In Tennessee an unsatisfied judgment from a car accident can cost you your driver license, which costs you the drive to work, which costs you the income you needed to pay the judgment. It is a loop, and people get stuck in it for years.
A Chapter 13 plan can address the underlying judgment and, in the right circumstances, open the door to getting the license reinstated. If that is your situation, say so when you call. It changes the shape of the case.
How a Chapter 13 runs
What you are behind on, what you earn, what you are trying to keep. That is enough to start.
An approved course within 180 days before filing. The day the petition is filed, the automatic stay begins and collection stops.
Jonathan builds a plan that covers your arrears and priority debt out of what your budget can actually carry, and files it with the court.
A short meeting with the trustee, then a confirmation hearing where the court approves the plan. Payments begin promptly after filing.
You make one payment a month and the trustee distributes it. Complete the plan and the remaining qualifying balance is discharged.
Common questions
Three years or five years, depending on how your household income compares to the Tennessee median. Longer plans can lower the monthly payment.
Filing halts a scheduled sale immediately through the automatic stay, and a Chapter 13 plan can then spread the missed payments across the life of the plan so you can catch up while staying in the home. You generally also need to keep making the ongoing monthly mortgage payment.
It can. Chapter 13 includes a co-debtor stay that protects a cosigner on consumer debt while the case is active. Chapter 7 does not offer that protection.
In some cases. Where a license suspension traces back to an unsatisfied judgment from a motor vehicle accident, a Chapter 13 plan can address that judgment and open the path to reinstatement. Whether it applies depends on why the license was suspended.
Related
Tell Jonathan what is happening and he will tell you which chapter fits, or whether bankruptcy is the wrong tool for your situation.