By Ryan C. Wood

When people think about Chapter 13 bankruptcy cases, most people think that it is the bankruptcy chapter under which they are forced to pay all their debts back and are stuck with the payment for the duration of the Chapter 13 plan.  It is information like this that sometimes prevents people from seeking the advice about bankruptcy.  This article was written to provide you with more information and insight into Chapter 13 bankruptcy cases.

Do I Have to Pay Back All My Creditors?

Many people do not seek the advice of bankruptcy attorneys because they think that they have to pay back all their debts in a Chapter 13 plan.  This is not always the case.  The amount you pay in a Chapter 13 plan depends on a variety of factors such as: your monthly disposable income, if there are any unprotected assets and the amount of missed secured debt payments (such as mortgage or car payments).  Some people pay back 0% of their unsecured debts while others must pay 100% of their unsecured debts.  It just depends on your financial circumstances.

Why Should I File a Chapter 13 Bankruptcy?

There are many reasons why people file a Chapter 13 bankruptcy.  One of the most common reasons to file for a Chapter 13 bankruptcy right now is the ability for consumers to strip, or get rid, of their junior liens from their real estate.  For this to be possible the value of your property must be worth less than what is owed on your first mortgage.  With the current economy there are a lot of underwater mortgages out there that can be removed forever.  Consumers can strip their home equity lines of credits or other junior liens that may range anywhere from $10,000 to $200,000+.  That is a substantial amount of savings.  Another reason to file a Chapter 13 bankruptcy is to save a home from foreclosure by paying back missed mortgage payments in the Chapter 13 plan.  This allows the missed mortgage payments to be spread out in the Chapter 13 plan over 3 to 5 years instead of having the entire amount payable immediately.  A third reason to file a Chapter 13 case is to repay priority tax debt in the Chapter 13 plan.  Generally taxes that are not more than three years old are not dischargeable in bankruptcy, a Chapter 13 plan allows them to spread out that payment for 3 to 5 years.  These are just a few of the reasons to file a Chapter 13 bankruptcy case.

Am I Stuck in a Chapter 13 Plan for the Duration of the Plan?

Circumstances can change at any time.  Fortunately, Chapter 13 bankruptcy cases are fairly flexible.  If your financial situation changes, such as loss of job, decrease in income, increase in expenses, or any other change, you can always modify your Chapter 13 plan to reflect the changes in your financial situation.  If the changes are significant enough you may even convert your Chapter 13 bankruptcy case to one under Chapter 7.

Can I Voluntarily Dismiss My Chapter 13 Plan?

There may be many reasons why you would want to dismiss your Chapter 13 plan.  Luckily, under 11 U.S.C. §1307, you can voluntarily dismiss your Chapter 13 plan at any time as long as you have not previously converted your case from a Chapter 7, 11, or 12.  Chapter 13 cases are usually fairly complicated and it is recommended that you seek the advice of an experienced attorney to help you navigate through your Chapter 13 case.