Chapter 13 is a category of consumer bankruptcy in which debtors are able to stop the seizure of collateral by secured creditors, repay arrearages on priority debts, and pay a portion of their unsecured debts under the protection of the federal courts. These debts are spread over a period of time, often up to five years, with payments being made to a court appointed Trustee.

In calculating payments under a Chapter 13 plan, a formula utilizing a person or family's disposable income (the amount of money left over after paying living expenses each month), and the secured, unsecured priority, and unsecured debt is used. The attorneys at Colorado Legal Associates can help you develop a budget analysis that reflects your current living expense and income to see if Chapter 13 is a good option for you.

In cases where there is not enough disposable income to pay all of the creditors, debts owed to unsecured creditors will be paid at a fraction of their total outstanding amount and the remaining balances are wiped away.

Chapter 13 can be beneficial to many debtors because it can save a home from foreclosure or a car from repossession.

Some attorneys refuse to do Chapter 13 bankruptcies for clients because these petitions are more difficult to prepare and creditor objections are more common. Also, although protection to the debtor begins with the filing of the petition, the Chapter 13 process typically takes a longer period of time compared to Chapter 7. However, for some clients who desire to retain real estate or personal property that could otherwise be lost in a Chapter 7 filing, Chapter 13 can be their best alternative.

Chapter 13 is also the only way under the bankruptcy laws to deal with debts such as back taxes and student loans.

Call us today for a free consultation, so we can help you determine if a Chapter 13 Bankruptcy is right for you.