Bankruptcy Reorganization for Individuals

We often hear about corporations filing for bankruptcy reorganization. American Airlines, General Motors, Chrysler and Lehman Brothers are just a sampling of those which have filed to restructure their debt through a Chapter 11 bankruptcy. Here in Alabama, we have seen Jefferson County file for bankruptcy reorganization pursuant to Chapter 9 of the bankruptcy code. Family Farmers and Fisherman are allowed to restructure their debt utilizing Chapter 12 of the bankruptcy code.

Bankruptcy reorganization allows corporations, municipalities, farmers and fishermen to shed debt while going forward with their respective businesses. Future operations are much more likely to be successful with lower debt. These types of reorganizations are deemed favorable as they keep employees from losing their jobs and provide a mechanism for creditors to be paid at least part of what they are owed.

What many people don’t know is that a similar type reorganization is available for most individuals. Chapter 13 of the bankruptcy code provides for the adjustment of debts of an individual with regular income. A person filing for reorganization pursuant to Chapter 13 is usually allowed to keep her property and pay part or all of her debts over a three to five year period.

In our offices, we use Chapter 13 to help people in a variety of ways:

• If a family is behind on mortgage payments and facing a foreclosure, we can often stop the foreclosure sale and give the family the ability to catch up on mortgage payments over a period of time. This keeps the family in its home thereby providing stability and a chance to start fresh.
• If an individual is behind on his car payments and facing a possible repossession, we can stop the repossession and provide a way him to pay for the car under the protection of a bankruptcy judge.
• If a wage garnishment has reduced the amount of pay that an individual is taking home, we can often stop the garnishment and create a plan which will allow the debtor to pay back what she can afford over a period of time.
• If an individual has back taxes owed to the IRS or some other taxing authority, we will usually be able to come up with a plan to pay the back taxes over time while avoiding a wage levy or tax lien.
• If an illness or accident has created excessive medical bills, a Chapter 13 plan will often allow a person to work her way out of debt with affordable payments.

These examples are only a small sample of the ways in which a Chapter 13 bankruptcy can help someone struggling with debt. Chapter 13 is very flexible. Over the years, we have been able to put together plans to address many different financial problems.

Perhaps the most attractive aspect of a Chapter 13 bankruptcy is that debtors are often able to pay all or part of their attorney’s fee through the plan. This will vary from case to case and is based upon a number of factors but, if you think a Chapter 13 bankruptcy may be an option for you, you owe it to yourself to explore your options. If you would like to schedule a free confidential initial consultation in one of our offices with one of our licensed attorneys, you can find our office closest to you at www.bondandbotes.com.