Chapter 13 Utah

WHO SHOULD FILE CHAPTER 13 BANKRUPTCY?

When debts become overwhelming, many people seek one of two types of bankruptcy for relief, depending on their income and needs. For instance, people with little income remaining at the end of each month and minimal assets usually choose to file for Chapter 7 bankruptcy, the chapter that wipes out (discharges) qualifying debt in four to six months without the need to repay creditors.

Sometimes called the Wage Earner’s Bankruptcy, Chapter 13 allows those with enough income to repay all or part of their debts as an alternative to liquidation. It’s bankruptcy for those whose biggest problem is dealing with creditors’ demands for immediate payment, not lack of income.

One of its most attractive features is the chance to keep your home after Chapter 13 bankruptcy as long as you can pay the mortgage and any amount required by your Chapter 13 repayment plan. The Chapter 13 plan does not have to pay debts in full; it can provide for only fractional payments to unsecured creditors. The Bankruptcy Code does require the priority claims be paid in full. The most common priority claims are recent taxes and family support arrearages.

Under Chapter 13, people have three to five years to resolve their debts while applying all their disposable income to debt reduction. The option allows applicants to eliminate unsecured debts while catching up on missed mortgage payments. Short-circuiting home foreclosure is one of the option’s most attractive features. Though keeping your home can be a major relief, you’re required to spend years living under the supervision of a court-appointed trustee who will collect and distribute your payments.

If you live in Utah and are investigating whether a bankruptcy filing will resolve your financial problems, contact the Law Office of Marji Hanson to discuss your debt management options. Marji can find a solution that works best for your financial circumstances.

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