Another common question that we receive in a regular basis is, “Do I have to repay all my debts if I file a chapter 13 bankruptcy?”
Well, in a chapter 13 bankruptcy, generally speaking, there are two different approaches. You either, A, repay what you can afford to repay, or B, pay what you have to repay. Those two differ depending upon your income and what you’re trying to accomplish in your chapter 13 bankruptcy. What you can afford to repay is primarily based upon your income versus your expenses. So individuals that have a high income level usually end up repaying more of their debts simply because they have the ability to repay their debts. Now, sometimes that may mean they repay all of their creditors. But in most cases that’s not the case.
In a chapter 13 bankruptcy where you’re repaying what you have to repay, that’s designed for individuals that are trying to stop a house that’s in foreclosure, to cure mortgage arrears, to pay for a vehicle at a reduced interest rate, to pay certain types of taxes. In those type of cases, their income isn’t as important has how much debt they have to repay to resolve those issues that they want to take care of. So if they’re attempting to stop the foreclosure and to catch up the mortgage payments, well, we have to have enough money in the chapter 13 bankruptcy to accomplish that goal.
So when we look at plans, in most cases we’re trying to minimize or reduce the amount of money that you’re repaying to your unsecured creditors, creditors such as credit cards, medical bills, purse loans. The goal in these cases is to not repay those type of creditors but to minimize what you repay them, because I hate to say it, in a chapter 13 bankruptcy, nobody gives you a thank you or an attaboy for repaying more of your debt. Bankruptcy is bankruptcy. So if we file a bankruptcy, the goal is to minimize what you repay and to repay as little debt as possible but still hold on to the assets you wish to retain and keep.
Sawin & Shea– Indianapolis Bankruptcy Attorneys
Are you carrying debt from an abusive relationship and do not know what to do? The Indiana bankruptcy attorneys at Sawin & Shea can help determine the options available to you. Bankruptcy can be the best way to free you from debilitating debt. With years of experience representing good people in bad financial situations, we can answer all your questions. Please do not hesitate to call us today at 317-759-1483 or send an email for a free consultation. We are ready to help.