Chapter 13 Bankruptcy
Under Chapter 13 Bankruptcy your debt is reorganized and you are put on a payment plan that helps you to pay off your debt over time. Unlike a Chapter 7 Bankruptcy, which simply eliminates your unsecured debt and has no payments, a Chapter 13 Bankruptcy is a powerful tool to pay creditors on terms that are more favorable to you. If you are in danger of losing your home to foreclosure, or your car to repossession, filing a Chapter 13 Bankruptcy can stop those processes and help you to keep your property.
Repayment plans under a Chapter 13 Bankruptcy can allow for the repayment of delinquent income taxes or back child support over a 3 to 5 year period. It also prohibits wage garnishment in most cases.
We are here to help you through the process of filing bankruptcy and would be happy to assist you on your journey to financial freedom.
The Chapter 13 Bankruptcy Process
Before you can file bankruptcy, you must receive credit counseling from an agency approved by the United States Trustee’s office. We will be happy to recommend a good credit counselor or you can find one online at the trustee’s website at www.usdoj.gov/ust and click “Credit Counseling and Debtor Education.” These agencies will most likely charge a fee for their services.
You will also be responsible for paying the filing fee for your Chapter 13 bankruptcy filing.
Understand, that every case is unique, and we will be happy to explain the process before you make a final decision on which type of bankruptcy to file. Your Allmand Law attorney will stand by your side and help you with all the details of your bankruptcy.
Filing Chapter 13 Bankruptcy
Filing Chapter 13 Bankruptcy is an option for debtors provided they have income or wages sufficient to fund a repayment plan. Bankruptcy laws also set certain limitations on both secured and unsecured debt. If a debtor is over those limits, they are not eligible to file a Chapter 13 Bankruptcy. If you have a prior bankruptcy discharge under Chapter 7 or Chapter 13 you should consult with a qualified attorney to advise you of your eligibility. Please contact us by filling out our free online evaluation form.
The Chapter 13 Repayment Plan
If you file a Chapter 13 bankruptcy, the paperwork for your repayment plan will be designed while you and your attorney discuss your case. It must be approved by the Trustee’s office, but you must be prepared to make the first payment when you are ready to file your bankruptcy case.
How much you will have to pay under the repayment plan will depend on your debt level, how many debts are considered priority debts (debts that must be paid in full), your payment terms on your secured debt. It will also take into account your living expenses.
The length of your repayment plan depends on how much you earn and how much you owe. If your average monthly income over the six months prior to the date you filed for bankruptcy is more than the median income for your state, you’ll have to propose a five-year plan. If your income is lower than the median, you may propose a three-year plan. No matter how much you earn, your plan will end if you repay all of your debts in full, even if you have not yet reached the three- or five-year mark.
Your Allmand Law bankruptcy lawyer will work through what the payment plan will look like with you and make sure you are comfortable with it before your case is filed.
What Happens If You Can’t Make Chapter 13 Plan Payments
Sometimes situations can get the better of you even after you have filed bankruptcy. Making payments on your Chapter 13 repayment plan could become a struggle for a number of reasons, such as – you lose your job six months into the plan or an unexpected illness makes you unable to work. When this situation arrises the bankruptcy trustee may modify your plan, or the court might let you discharge your debts on the basis of hardship.
If neither of those options works, you might be able to convert your Chapter 13 bankruptcy to a Chapter 7 bankruptcy. It may also be better to have the court dismiss your Chapter 13 bankruptcy case (this option would mean that you still owe all of your debts, plus any interest creditors did not charge while your case was pending).