At Maxwell Gilchrist, our New Mexico Chapter 13 Bankruptcy attorneys can help New Mexico residents repay some or all of their debts and get a new start. We can serve all of New Mexico with phone or online meetings. If you are in Albuquerque or want to make the drive, we can meet in person as well. Set up your free consultation today.
What is Chapter 13 Bankruptcy?
Chapter 13 is often called “reorganization” and/or “the wage earner’s plan” bankruptcy and it allows individuals in debt to consolidate their debt while making convenient monthly payments to a trustee. Our New Mexico bankruptcy lawyers can help develop a payment plan, which can repay your debt over 3-5 years. The amount of the monthly payment and the length of the payment plan is based on the following factors:
- Monthly income
- Monthly expenses
- Amount and nature of debt
After the Chapter 13 payment period ends, any eligible debts will be discharged, such as credit card debt, medical bills and personal loans.
A common reason to file a Chapter 13 bankruptcy instead of Chapter 7 is deal with a secured debt that can’t be dealt with another way. For example, a Chapter 13 can stop a bank or a finance company from repossessing a vehicle. It may be possible to reduce the amount owed and the payment for the vehicle in a Chapter 13.
Foreclosure is another common reason that people choose to file a Chapter 13 bankruptcy. A Chapter 13 bankruptcy and payment plan can allow individuals to stop foreclosure and get caught up on past due payments.
Chapter 13 bankruptcies are also help in a situation where individuals have property that is non-exempt. If property is non-exempt (or not protected) in Chapter 7, then the bankruptcy trustee can seize that property and sell it to pay creditors. However, a Chapter 13 bankruptcy will allow you to keep your non-exempt property. Also, if you have filed for bankruptcy before and received a discharge within the last 8 years, a Chapter 13 may be your only option. Finally, Chapter 13 bankruptcies provide a discharge of certain debts that can’t be discharged in a Chapter 7 bankruptcy. For example, marital property settlements debts that are not support can be discharged in a Chapter 13.
Typically tax and other government debts are not dischargeable. However, there are great benefits to putting tax debt into a Chapter 13 plan. A Chapter 13 plan can freeze interest or penalties on some taxes. This allows the payment to reduce the principal amount owed to the government, instead of going to pay interest and penalties. A Chapter 13 can also give individuals a chance to pay the tax debt over a longer period of time.
Our local bankruptcy attorneys will review all of your income, expenses, assets and debts to come up with payment period (3-5 years) and a payment plan that will work for you and your situation.
Factors to Consider – Filing Chapter 13
- You have significant equity in a home or other property and you want to keep that equity
- You have regular income and can pay your living expenses, but you can’t keep up with payments on your debts
Benefits of Filing a Chapter 13 Bankruptcy
- You can keep most of your property while spreading out time to pay past due accounts.
- You’ll have 3-5 years to catch up on delinquent accounts – according to a plan that you and the trustee have agreed is workable for you.
- You’ll make one monthly payment to the bankruptcy trustee for distribution. You will have no direct contact with creditors during the Chapter 13 period and you will learn to live on your expenses after your secured debts are paid.
To learn more about Chapter 13 bankruptcy and whether it is an option for you, contact our office to schedule a free evaluation. You can also start the free bankruptcy evaluation here.