A senior came to TAIEBLAW who has a very good income on paper but is getting killed by the credit card payments each month since they are over 30% interest. The senior is able to file a Chapter 13 plan to substantially eliminate a large chunk of her debt.
She would not be eligible for a Chapter 7 since she has a substantial surplus in her budget if she did not have to pay her credit card debts. However, a Chapter 13 would require a good faith payment and would stop the huge interest rates and ridiculous payments that she makes each month. In a Chapter 13, you have up to 60 months (5 years) to pay back your creditors. Also, the creditors will only get paid if they file proof of claims, and how much they get paid is dependent on the Chapter 13 plan.
In this senior’s case she is proposing a base plan to pay a portion of her debt over 36 months. However, the creditors only have 70 days from the date of filing to file a proof of claim, or they don’t get paid. The claim bar date would have a much bigger impact if a debtor proposed to pay 100% of her unsecured debt due to the means test or disposable income which would result in lowering her trustee payments or completing the plan in a shorter period of time. However, the whole purpose of the Chapter 13 is to eliminate the huge monthly credit card payments and to get the stay in effect so creditors cannot pursue someone who is overwhelmed with debt.
Thus, if you are overwhelmed with credit card debt, you may be able to file Chapter 13 or Chapter 7 to get creditors off your back and set up a plan you can afford, or you may even be able to walk away from all your credit card debt depending on your circumstances.
If you have any questions concerning this matter or any other matter contact TAIEBLAW at 856-235-4994 or visit our website at TAIEBLAW.COM, and schedule a FREE initial consultation.
Steven N. Taieb, Esq. has been a South Jersey Bankruptcy Attorney for over 33 years and is board certified in consumer bankruptcy law by The American Board of Certification which is accredited by The American Bar Association.