Chapter 13 Bankruptcy: A Case Study

Chapter 13 Bankruptcy solves multiple problems for Chicago client.

This is an actual Chapter 13 bankruptcy that our office filed in the bankruptcy courts. The chapter 13 bankruptcy helped our client do the following:

In one Chapter 13 plan Thinking Outside the Box, Inc. was able to set up a plan to pay off the clients entire debt to the IRS without interest. Bring her mortgage payments current and stop foreclosure. Chapter 13 also allowed our client to pay off 96,000 in credit cards with no interest for a little over $10,000.

A client came to our Thinking Outside the Box office with the following problems:

1. Client owed the IRS $9,000 in unpaid taxes. The IRS was on the verge of taking the unpaid taxes out of her paycheck (called a tax levy).

2. Client was three months behind on her mortgage payments and her mortgage company refused to let her make payments on the mortgage until she paid all of the missed payments. To make matters worse the mortgage company had started the foreclosure process.

3. Client had around $96,000 in credit card debt. She could not make the minimum payment of around $1,900/month. Further, some of the credit cards had been referred to collection agencies, some of the credit cards had been referred to law firms who threatened lawsuits seeking judgments for the balances on the credit cards.

Thinking Outside the Box, Inc. designed a Chapter 13 plan to allow the client to address all of her financial problems.

First, we designed the plan to pay off the unpaid taxes in full (required by law). However, by including the taxes in the Chapter 13 plan the client was able to pay off the taxes over a five-year period. Even better the Chapter13 prohibited the IRS from charging interest on the unpaid taxes saving the client $540.00 per month in interest.
The filing of the Chapter 13 plan also stopped the IRS levy on our client’s weekly paycheck.

Second, our office designed the chapter 13 plan to allow the client to make her unpaid mortgage payments over a five-year period. The filing out of the Chapter 13 plan also forced the mortgage company to accept the normal monthly mortgage payments and stopped the foreclosure process.

Third, our office designed a Chapter 13 plan that let her address the $96,000 in credit card debt. We crafted a plan that allowed our client to payoff the credit card debt with no further interest payments or late fees. This saved the client about $1,400 per month in interest and fees. We were further able to structure the Chapter 13 plan allowing the client to payoff the entire $96,000 credit card balances with payment totaling only $10,600.

That is why Thinking Outside the Box, Inc. calls a Chapter 13 Bankruptcy plan the Swiss Army Knife of financial tools. In one Chapter 13 plan Thinking Outside the Box, Inc. was able to set up a plan to pay off the clients entire debt to the IRS without interest and prevent a wage levy. Bring her mortgage payments current and stop foreclosure. Chapter 13 allowed the client to pay off 96,000 in credit cards with no interest for a little over $10,000.