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Posted on in Chapter 13

Chapter 13 payment plans usually have you pay something to all of your creditors. But not necessarily. Certain creditors may get nothing.

Our last blog post was about the “discharge”—the permanent write-off—of debts through a Chapter 13 “adjustment of debts.” This discharge happens at the end of a successful case, which usually takes 3 to 5 years.

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Posted on in Chapter 13

The discharge of debts is just one of the tools of Chapter 13 for achieving your financial goals. It works differently than in Chapter 7.

Our last blog post was about the permanent write-off—the “discharge”—of debts in a Chapter 7 “straight bankruptcy.” This discharge happens at the end of the case, which is usually only about 4 months after filing.

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Priority proofs of claim need to be carefully monitored in a Chapter 13 case. Make sure one’s filed so it gets paid, and at the right amount.

Priority Debts and Chapter 13

One major reason you’d file a Chapter 13 “adjustment of debts” case is if you have “priority” debts. These are special debts that generally can’t be discharged—legally written off—under Chapter 7 “straight bankruptcy.” So they must be paid.

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Often creditors’ proofs of claim do not affect the amount you have to pay in a Chapter 13 case. But sometimes they make a huge difference.

In our last blog post we introduced “proofs of claim.” A creditor files a proof of claim in your bankruptcy case to say how much it thinks you owe. The proof of claim says why you owe the money, often backed up with some documentation.

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There are various ways of dealing with debts that arise during the course of your Chapter 13 “adjustment of debts” case.

On Monday we wrote about debts that arise before filing a Chapter 7 case and those that arise after filing. Those that arise before filing—“pre-petition” debts—are included in the “straight bankruptcy” Chapter 7 case. If they are the kind of debts that can be written off in bankruptcy (“discharged”), then they are. Those debts that arise after filing—“post-petition” debts—are not included and are not discharged.

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