Michael B. Sachs, Attorney

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What is a Chapter 13 Bankruptcy?

A Chapter 13 Bankruptcy is also called a "reorganization". When you file for bankruptcy under Chapter 13 you are able to effectively reorganize and pay your debts, often in a reduced amount and at a lower interest rate. Unlike private credit counseling, the creditors are required to accept the terms of a Chapter 13 Plan of reorganization. A Chapter 13 has traditionally been used to prevent a foreclosure or repossession. Another powerful aspect of the Chapter 13 bankruptcy is the ability for the debtor to "strip liens". Lien stripping is an court order removing a junior line that is wholly unsecured (has no equity). Since the reforms of 2005 more high income earners have been stopped from filing a Chapter 7 and have used the Chapter 13 for debt relief.


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