Filing For Chapter 13 A Path to Debt Reorganization
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Chapter 13 bankruptcy offers a path forward for individuals with steady income who need to catch up on overdue debts. With a 3- to 5-year repayment plan, you can reorganize what you owe and bring your payments up to date over time. This option is especially helpful if you’re facing foreclosure or the risk of losing your car. For homeowners behind on payments, Chapter 13 lets you make up missed amounts gradually while maintaining your current obligations—helping you keep your home, your car, and your financial stability.
Donald J. MacDonald, Esq. Partner
(781) 654-5050
don@colemanmacdonald.com
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Chapter 13 bankruptcy allows you to keep all your assets, even those that might not be protected in Chapter 7. You aren’t required to sell your property; instead, you pay back what you owe through a structured plan. Chapter 13 also offers unique advantages, such as the potential to eliminate a second mortgage or home equity line if your home’s value is less than what you owe on the first mortgage. Including IRS debt in your repayment plan can stop new tax liens and lets you pay off tax obligations over time, shielded from further IRS collection actions.
Tackling IRS Debt
Filing for Chapter 13 bankruptcy lets you propose a court-approved repayment plan to pay off your debts over 3 to 5 years. The plan usually gives priority to secured debts like your home and car. Once you file, the automatic stay stops foreclosure, repossession, and other collection efforts, including those by the IRS. By sticking to your payment plan, you can keep your property and regain control of your finances, all while resolving tax and other debts in an organized, manageable way.
Chapter 13 Bankruptcy in Essex County, Massachusetts
Trusted Essex County Bankruptcy Lawyers Chapter 13 bankruptcy is a court-supervised debt reorganization plan for individuals with regular income, allowing them to repay debts over three to five years. This option is ideal for those who want to prevent foreclosure, protect their assets, and manage overwhelming debt without liquidating property.
What is Chapter 13 Bankruptcy?
- Debt Reorganization: Chapter 13 helps you reorganize your debts into a manageable repayment plan, rather than selling off assets as in Chapter 7.
- Repayment Plan: You and your bankruptcy attorney collaborate to propose a repayment plan based on your income and expenses. This plan is then submitted to the U.S. Bankruptcy Court for approval.
- Court Approval: The plan must be feasible and must ensure creditors receive at least as much as they would in a Chapter 7 case.
- Automatic Stay: Filing for Chapter 13 immediately halts foreclosure proceedings, wage garnishments, and other collection actions.
Key Benefits of Chapter 13
- Save Your Home: Chapter 13 allows you to catch up on overdue mortgage payments and avoid foreclosure.
- Asset Protection: Unlike Chapter 7, you keep all your property while making payments to creditors.
- Affordable Payments: Monthly payments are consolidated and tailored to your financial situation.
- Debt Discharge: After successfully completing the plan, any remaining eligible debts are wiped out.
Filing for Chapter 13 in Essex County, MA
- Local Procedures: The District of Massachusetts has specific Chapter 13 plan forms (Official Local Form 3) that differ from federal forms.
- Where to File: All filings are made with the U.S. Bankruptcy Court for the District of Massachusetts.
- Legal Guidance: Working with an experienced Essex County bankruptcy attorney ensures your plan is properly structured and your interests are protected throughout the process.
Important Considerations
- Debt Limits: Chapter 13 has debt limits (currently $419,275 for unsecured and $1,257,850 for secured debts). If your debts exceed these limits, Chapter 11 may be necessary.
- Feasibility & Eligibility: The court will review your plan for realism and sustainability. You must pass a means test and have a regular income to qualify.
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Which Chapter Should I File?
Understanding Bankruptcy in Essex County Massachusetts The right bankruptcy chapter depends on your situation:
- Chapter 7: Discharges unsecured debts for those with limited disposable income.
- Chapter 13: For individuals who want to catch up on missed payments or have enough income to follow a 3–5 year payment plan. Our attorneys can help you decide which option fits your needs.
Key Differences: Chapter 7 vs. Chapter 13
- Chapter 7:
- Discharges most unsecured debts (credit cards, medical bills, personal loans)
- Not everyone qualifies—eligibility determined by income and expenses (the “means test”)
- Some assets may not be fully protected by exemptions
- Chapter 13:
- Organizes debt repayment through a 3–5 year plan
- Allows you to keep all assets
- Helps you catch up on missed mortgage or car payments, stop foreclosure or repossession, and potentially pay off certain IRS debts
How Long Will It Take to Receive a Discharge?
- Chapter 7: Usually about four months from filing, assuming all requirements are met.
- Chapter 13: After you complete all payments under the plan (3–5 years). Suffolk County Bankruptcy Lawyers Legal Advice
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