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If you have concluded that it is impossible for you to meet all your debt obligations, Chapter 13 bankruptcy may be the solution. This form of bankruptcy is a “reorganization” rather than a “liquidation,” because you retain ownership of all your property when you successfully file a Chapter 13 bankruptcy. One very appealing benefit that can provide temporary relief is the automatic stay. While the reorganization is underway, creditors are required to suspend their collection attempts (though there are some exceptions to this rule.)

With a Chapter 13, you are required to use your income to repay your debt, or a portion of your debt, over time. When you file, you must provide proof that you have sufficient income to keep your reorganized payments current, and you present a payment plan proposal. A bankruptcy attorney can be of great assistance during this phase of the process, because there are very specific rules. One stipulation is that priority debts must be paid in full. These would include secured debts like:

  • Back spousal support
  • Delinquent child support
  • Mortgage delinquencies
  • Motor vehicle payments

Unsecured debts like credit card balances and unpaid medical bills may or may not be paid back in full. The portion that you will be required to pay will depend on the amount of the debts in relationship to the disposable income that remains after your priority debt payments are made. Payments plans are structured to last for three to five years; the exact duration will depend upon the circumstances.


Mortgage Loan Modification

If you are thinking about a Chapter 13 bankruptcy filing because you are concerned about an impending foreclosure, you may have another option. You could contact your lender and ask about a potential loan modification. An interest rate reduction, a conversion from a varying rate to a fixed rate, and/or a term extension could bring your monthly payment down to an affordable level. We can evaluate your situation and guide you toward the solution that is right for you given the circumstances.

Debt Can Be Effectively Managed!

Chapter 13 bankruptcy can create a sensible repayment structure that leads to complete freedom in a few years, and you lose nothing in the process except a lot of stress and anxiety. This form of debt relief can be the right choice for many, but as we have stated, a loan modification is another possibility. We serve many communities in Oregon and Washington, including Portland, Eugene, Medford, Salem, Bend, Vancouver, Tri-Cities, and Tacoma, and we provide free bankruptcy consultations. If you would like to make the OlsenDaines connection, call us right now toll-free at 1-800-682-9568.