Financial troubles can come to anyone; they affect people in a variety of circumstances and for many reasons. If you are among the many people in the country facing foreclosure or repossession, filing for bankruptcy may be the right choice for you.

If you are behind on mortgage payments, property taxes, unpaid taxes, child support payments, car payments or other secured loan payments, bankruptcy can be a way to set your financial affairs in order. For many people, we recommend filing under Chapter 7, if possible, because it allows you to wipe out most debt.

Depending on your income, however, Chapter 13 bankruptcy may be your best option. At The Sexton Law Firm, our skilled bankruptcy attorney has over 25 years' experience in bankruptcy matters and can quickly determine which path is best for you. We can help you navigate bankruptcy — and use the law to make your life better.

What Is Chapter 13?

Chapter 13 bankruptcy is often referred to as a "reorganization" of your debts; it is also called "bill consolidation" or "wage earners bankruptcy." This type of bankruptcy helps those who have more debt than they can repay. Some people think they cannot file for bankruptcy if they are still making an income, but that is not the case. With Chapter 13 bankruptcy, you can continue to earn money while renegotiating the terms of almost all your debts.

As with all types of bankruptcy, a stay is immediately put in place once you file for Chapter 13 bankruptcy. This stay will block any foreclosure or repossession and will keep the IRS from waging any levies. In fact, Chapter 13 has been known to help people either eliminate completely or significantly reduce "underwater" mortgages. With Chapter 13 bankruptcy, you can work to repay all or at least part of your debt without the incessant calls from debt collectors, and you can do so while still paying your basic daily living expenses.

Chapter 13 Bankruptcy Plans

When you file for Chapter 13 bankruptcy, you submit a plan to a Chapter 13 trustee that details the monthly payments you will make over a period of three to five years. These payments will be scaled to match what you can realistically afford. Once the bankruptcy court approves your plan, the trustee will disburse all but about 10 percent of your monthly payments to creditors as outlined in the plan you submitted. The trustee will then hold onto that 10 percent until your plan is completed. Once you finish your plan, you will receive a discharge of the remainder of your general unsecured debts.

Chapter 13 Bankruptcy Advantages

There are several advantages to filing for Chapter 13 bankruptcy, including:

  • Chapter 13 bankruptcy will reduce your payments on secured debts, including car loans.
  • Chapter 13 bankruptcy will allow you to keep your home by providing you with time to catch up on missed mortgage payments.
  • Chapter 13 bankruptcy will allow you time to catch up on child support.
  • Chapter 13 bankruptcy will allow you time to catch up on unpaid taxes.
  • Chapter 13 bankruptcy will enable you to repay portions of your unsecured debts, including credit card debt.

Which debts are and are not dischargeable in bankruptcy varies depending on the chapter you file under and the taxes involved. Analyzing this information can be very complicated and confusing. It is therefore advisable to first speak with a knowledgeable bankruptcy lawyer before proceeding.

At The Sexton Law Firm, in Knoxville, Tennessee, we can help you create a successful plan tailored to your situation. Let us use our skills and experience to help you get back on your feet. Call us today at 865-297-5242 or fill out our online quick contact form. We will help you understand your options and potential solutions and will guide you through the process of reclaiming your financial freedom.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.