John F. Hitchcock

​Chapter 13 Bankruptcy may be thought of as an individual’s version of a corporate reorganization. A timeout on collections and help crafting a manageable repayment plan allows many Chapter 13 filers to repay many of their debts, and puts them on the path to a more stable financial future. Many people think of Chapter 7, and the loss of personal property, when they think of bankruptcy, Chapter 13 can be a great option that allows you to keep your property and make payments over time rather than liquidating all nonexempt assets. Chapter 13 is similar to taking out a consolidation loan except that you are using your own money in the form of future earnings. An experienced bankruptcy attorney like John F. Hitchcock can help you determine the best option to best resolve your personal and financial problems.

The key to a successful Chapter 13 bankruptcy is the repayment plan. It allows a debtor to keep his or her property and pay debts down over a set period of time, typically three to five years. While the plan is in place, the debtor makes fixed payments to the Chapter 13Trustee, typically biweekly or monthly. The Trustee then distributes the funds to creditors according to the terms of the plan.

During the plan years, the debtor may catch-up on past-due payments without voiding the contracts they entered into with creditors. This benefit of Chapter 13 is frequently used by petitioners to save their homes from foreclosure. In addition, creditors generally may not initiate or continue lawsuits, wage garnishments, or even make telephone calls demanding payments while the plan is in place.

 If the debtor fails to make the payments due under the plan, the court may dismiss the case or convert it to a Chapter 7 case and liquidate the debtor’s property. Failing to follow through with the plan, unless a change is approved by the court, may limit the debtor’s ability to file for bankruptcy protection in the future, and of course, removes the protections the failed plan had put in place.

 At the end of the plan period, Chapter 13 debtors are eligible to discharge much of their remaining debt. However, to the extent that they are not fully paid under the Chapter 13 plan, the debtor will still be responsible for the following:


•certain long term obligations like mortgages;
•debts for alimony or child support;
•certain taxes;
•debts for most government funded or guaranteed educational loans or benefit overpayments;
•debts arising from death or personal injury caused by driving while intoxicated or under the influence of drugs; and
•debts for restitution or a criminal fine included in a sentence on the debtor's conviction of a crime.

Contact our office for a free bankruptcy consultation in our
Smiths Station location

(334) 214 - 4600