Gold, Lange & Majoros, P.C.
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Gold, Lange & Majoros, P.C.
24901 Northwestern Highway, Suite 444
Southfield, Michigan 48075
Telephone: 248-350-8220
Fax: 248-350-0519
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Chapter 13
Chapter 13 provides consumers with a way to consolidate debt under federal law and repay creditors all or a portion of what is owed over time. Chapter 13 is for consumers who make sufficient income to pay all current living expenses, but not enough to pay off all debts in full or comply with creditors' demands. In Chapter 13, living expenses are paid first and whatever is left over goes into the consolidation plan. The calculation of your plan payments involves many variables, but most importantly it is based on your income and expenses. Whatever is left at the end of the month goes into the plan, even if it only pays creditors pennies on the dollar. Chapter 13 can be particularly useful for consumers with assets over exemption amounts, defaulted mortgages or other secured debts.

In Chapter 13, you submit a plan in which you set out a budget detailing your income and monthly expenses. Any excess income is paid to the bankruptcy trustee who distributes money to creditors on a pro-rata basis. The plan lasts for 36 to 60 months, unless your debts are fully repaid sooner. At the end of the Chapter 13 plan, any amounts still owing on most types of unsecured debt are forgiven.

Another benefit of Chapter 13, specifically for homeowners, is that back mortgage payments can be put into the Chapter 13 plan and paid off over the plan period, rather than all at once. So as long as you can continue to make regular post-filing mortgage payments, the bank can't foreclose on your home.

Even though tax debts are typically non-dischargeable, Chapter 13 can freeze interest and penalties on some taxes, allowing you to budget a repayment plan with payments going directly to reduction of principal.