5 Myths About Chapter 13
- All of my property will be lost
- I have to pay back all of my debt
- The trustee is going to inspect my house and belongings
- I can’t sell my house for 5 years
- It’s on my record an extra 5 years
Most of the negative perceptions of Chapter 13 are largely unfounded and have spread rough the internet based on either misunderstanding or obscure isolated cases.
The reality is quite different; Chapter 13 is used on a daily basis to:
- Protect the loss of valuable property at risk in Chapter 7 (e.g. cure mortgage arrears,
- Resolve and/or discharge tax obligations – in most cases with a relatively minor payment to unsecured creditors, if at ALL!
Obviously, the greater the income, the more the Court will look to have paid under a Chapter 13 plan; but only in the most exceptional cases with very high income debtors is that amount anything close to what debtors have been struggling to pay prior to bankruptcy in minimum payments (and those payments were with continuing interest and no elimination of debt.)
Any payments made in a Chapter 13 plan to unsecured creditors are without interest and all remaining unsecured debt at the conclusion of the plan is discharged and eliminated!