Melrose Park Bankruptcy Lawyer Describes Chapter 13

Let’s talk about a case like Chapter 13 where the debtor does have income available per month beyond their expenses.  So let’s talk about a case where someone has $5,000.00 worth of income and $4,000.00 worth of monthly expenses.  In that case, Chapter 13 is going to be most appropriate because the individual has $1,000.00 per month in disposable income that he or she can pay towards the creditors.  Now, the good news here is that we can stretch out the debt over three to five years.  So if someone owes $60,000.00 exactly and we’re going to pay back 100 percent, and they have $1,000.00 per month, we can stretch it out over 60 months at $1,000.00 per month. 

Now, the whole time they’re in this Chapter 13 payment plan, the interest will stop on unsecured debt.  There will be no lawsuits.  There’ll be no collection efforts.  The person is free to acquire money in the future.  The person is free to live their life.  As long as they’re making their $1,000.00-per-month trustee payment – and by the way, that has to be in guaranteed funds, either a money order or a cashier’s check, or very commonly it’ll come out of their paycheck in the form of a payroll control order.  So if the person is paid twice a month, the trustee payment will be broken into two, and the amount will be deducted every pay period out of their check to amount to the $1,000.00 per month in the example that I gave you.  But they are able to function and live their lives. 

What they can’t do is they can’t incur more credit or buy any property, finance property or finance vehicles, without court approval.  And that makes sense because they’re restricting the creditors already who are in the Chapter 13 repayment plan.  It wouldn’t be fair to let the individual go out and get additional financing when they’re still repaying the other creditors.

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