Chapter 13 Bankruptcy Attorney in Kansas City, Missouri
What is Chapter 13 bankruptcy?
What is Chapter 13 bankruptcy?
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In a nut shell a Chapter 13 Bankruptcy is a reorganization. Basically, you put together a plan that will let you take care of your debt over the next three to five years, and please do not misunderstand me when I say take care of the debt, I don’t necessarily mean pay it. People that need a Chapter 13 are typically facing a foreclosure, they’re facing a re-possession, they may have a car that they’re significantly under water in and some of them we can still do what’s called a cram down and basically pay the value. In all of the vehicles we can adjust the interest rates, we can adjust of course what we call priority claims or stretch them out and give the debtors time to pay those. The bulk of the debt, the unsecured non-priority debt are things such as hospitals and doctors and credit cards, and repossession efficiencies, payday loans, stuff like that.
Those types of creditors there’s nothing in the bankruptcy code that says they have to receive a certain percentage of their debt, the amount that they receive typically not based on the amount of debt that they’re owed. What they receive is based on other factors that are going on in the case, which could be excess equity in property, it could be excess income, whether it be under what we call a means test or the excel income expense budget. It could be based on odd transfers or transactions – things like that affect those creditors, but typically the unsecured non-priority debit in vast majority of the cases don’t get any money at all or they get very little. And that’s fine as long as the client completes the case, they get a discharge and whatever’s not paid is not paid and goes away.
Kansas City, KS bankruptcy attorney Tracy L. Robinson explains how Chapter 13 bankruptcy works. He states that, in a nutshell, a Chapter 13 bankruptcy is a reorganization. The debtor creates a plan to manage their debts over the next three to five years. But, he clarifies, when he says “take care of the debt,” he doesn’t necessarily mean pay it in full.
Most people who need a Chapter 13 are facing a foreclosure, a vehicle repossession, or have a car they’re significantly underwater on. In many cases, he can use tools such as a cram down—which allows the debtor to pay only the value of the vehicle rather than the full loan balance. He can also adjust interest rates and restructure priority claims, stretching out payments to give clients time to catch up.
The bulk of the debt in these cases usually consists of unsecured, non-priority debts—like medical bills, credit cards, payday loans, repossession deficiencies, and similar obligations. He points out that the Bankruptcy Code doesn’t require these types of creditors to receive any specific percentage of what they’re owed. What they receive depends on other factors in the case, such as excess equity in property, disposable income under the means test, or irregular transactions that affect repayment.
In most cases, these unsecured creditors receive very little—or nothing at all—and that’s perfectly fine. As long as the client completes the repayment plan, they receive a discharge, and whatever remains unpaid is wiped out for good.
