The Chapter 13 Process
First, you should find a bankruptcy lawyer who can provide you with a free evaluation and estimate to file.
The cost to file Chapter 13 bankruptcy consists of filing fees and fees charged by a bankruptcy attorney. Petitioners need to pay a $313 filing fee to the bankruptcy court. They also need to provide:
- A list of creditors and the amount of their claims
- Disclosure of the amount and sources of the debtors income
- A list of the debtors property, as well as an accounting of all contracts and leases in the debtors name
- A breakdown of the debtors monthly living expenses
- Tax information, including a copy of the debtors most recent federal tax return and a statement of any unpaid taxes.
Chapter 13 petitioners must stipulate that they havent had a bankruptcy petition dismissed in the 180 days before filing due to their unwillingness to appear in court. Also, anyone seeking bankruptcy protection, must undergo from an approved agency within 180 days of filing a petition.
Shortly after filing bankruptcy, the debtor also must propose a repayment plan. A bankruptcy judge or administrator will hold a hearing to determine whether the plan meets the requirements of the bankruptcy code and is fair. Creditors may raise objections to the plan, but the court has the final say.
Debtors can arrange to make up delinquent payments over time, but under Chapter 13 rules, all new mortgage payments from the time of filing must be made on time.
Types Of Claims In North Carolina Bankruptcy Cases
Claims from creditors will be categorized as a priority, secured, and unsecured.
- Priority claims are given special status under North Carolina bankruptcy law. Priority claims include most taxes and the cost of the bankruptcy proceeding. In general, a Chapter 13 plan must pay priority claims in full.
- Secured claims involve those with collateral , where the creditor can take back property if the debt is not paid. In order to keep the collateral, the debtor must pay the creditor at least the value of the collateral.
- Unsecured claims are those without collateral, such as medical bills, credit card debt, and personal loans. Non-priority unsecured claims do not need to be paid in full under the plan, but projected disposable income must go toward these claims over the course of the applicable commitment period. Unsecured creditors must receive at least what they would have been paid if assets had been liquidated under a Chapter 7 North Carolina bankruptcy.
Before Filing A Bankruptcy Petition
Though bankruptcy filings are sometimes the best way to resolve debts, they are not the only alternative. Before deciding if you should file for bankruptcy, consider steps to resolve your debt. Then speak with an attorney to determine if bankruptcy is right for you. Each of these alternatives has its own set of pros and cons and only an attorney can advise you as to the best course of action in your particular case.
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What Are The Steps To Filing A Chapter 13 Bankruptcy
Generally speaking, the initial process of filing a Chapter 13 bankruptcy is, more or less, similar to filing a Chapter 7 bankruptcy. It doesnât get much more complicated until you reach the point at which you have to properly calculate what your monthly Chapter 13 payments will be based on a number of different factors.
Things You Cannot Do During A Chapter 13 Bankruptcy
3rd April 2018
Filed under: Chapter 13
For those of you who have heard that Chapter 13 bankruptcy can be difficult, its not too far from the truth. Surviving a Chapter 13 bankruptcy repayment plan over the course of 3-5 years is no small feat and requires an iron-clad will and systematic conscious of your finances at all time. Bankruptcy requires individuals, many who havent lived according to a budget, to do just that. Set a long-term budget for all expenses, income, and debt, and stick to the plan while weathering life. It shouldnt be scary, however, nothing good is ever truly easy to obtain and legally discharging your debt using Chapter 13 bankruptcy protection is no different.
There are a number of things that are highly recommended you avoid during bankruptcy and then there are rules prescribed the US Bankruptcy Code that strictly prohibit while you are making chapter 13 bankruptcy payments in an effort to receive a discharge.
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Clients Often Choose To Work With The Sasser Law Firm Because We Provide:
- Attorney accessibility. At Sasser Law Firm your consultation and signing appointments will be with an attorney and throughout your North Carolina chapter 13 bankruptcy case the firms attorneys are accessible.
- Thorough case evaluations. Our North Carolina attorneys will review your household income, assets, expenses, and the kind of debt you have to determine what your options are.
- Honesty and integrity. We will be straightforward about whether we think filing for bankruptcy is right for you. This is a big decision, and we will not pressure you into making a move you are not comfortable with. We will also tell you if we dont think bankruptcy is appropriate based on the fact.
- Estimated repayment amount. Our goal is to project as closely as possible what the final Chapter 13 repayment amount will be based on the facts we are provided. We also aim to make the Chapter 13 plan payment as short and as low as possible.
- Quick action. To protect against the foreclosure of a home or vehicle repossession, we often file Chapter 13 bankruptcy cases on an expedited basis sometimes on the very day a client first walks in the door.
- Tenacious representation. Some chapter 13 cases are filed, confirmed, performed and discharged without difficulty. But if issues arise during the case we will fight for you. Plan confirmation does not end our involvement in seeking to represent you and assist you.
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Chapter 13 Bankruptcy Repayment Plan
Chapter 13 debtors create their own repayment plan, which must be written and submitted to the bankruptcy court at the outset of your case. The federal bankruptcy court provides a form for drafting a plan, or you can obtain one from a lower court in your area. The bankruptcy court must approve your plan for you to enter Chapter 13. The plan details your income, property, expenses and debts and includes a proposed payment plan.
A trustee will be assigned to review your plan, assess its compliance with bankruptcy laws, collect your payments and distribute them to creditors, and make sure all terms in your bankruptcy repayment plan are followed.
Your repayment plan will be divided into categories, which include:
Three: Will You Have To Pay For Property
Bankruptcy promises a fresh start, not new struggles. So don’t worry about losing everything you own in Chapter 13. Unlike Chapter 7, you won’t lose anything at all. But there’s a catch. You might have to pay for some of your property. Here’s why.
Every state allows you to “exempt” or protect essential belongings like furnishings, a car, some amount of home equity, and a retirement account. But you must pay the value of items that an exemption doesn’t cover through your repayment plan.
Start by reviewing your state exemptions, and check whether you can use the federal bankruptcy exemptions instead. Some states allow you to choose the list you prefer, and depending on what you own, the federal list might protect more of your property than your state’s exemptions. After choosing your list, add up the value of any property you can’t exempt.
You’ll find your state’s bankruptcy exemptions here. Links to individual states are at the bottom of the article. If your state isn’t there, check Nolo’s state bankruptcy exemption articles.
Of course, there’s another tricky angle here. You won’t add this amount to the total monthly payment amount we calculated in Step Two. Instead, compare it to the priority and nonpriority unsecured debt amount. If the current number is higher, you’ll use it instead of the priority and nonpriority unsecured debt amount.
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Who Is Eligible For Chapter 13 Bankruptcy
Anyone with regular income can file for Chapter 13 bankruptcy, as long as the total debt is within the threshold. The individuals income level helps determine the timeline of the repayment plan.
If your income exceeds the median level in your state, youll repay your debts over five years. If your income is below the median, repayment will take place over three years.
Here are some things to consider if you are thinking about filing for Chapter 13.
- Regular income is required.
- You must provide up-to-date tax returns and payments.
- Unsecured debts, like those from unsecured credit cards and personal loans, cant exceed $394,725. Secured debt for example, from a mortgage or car loan cant exceed $1,184,200.
- You may not qualify if youve had a bankruptcy dismissed within 180 days for a failure to appear in or comply with the bankruptcy court.
- To receive a discharge at the end of a Chapter 13 repayment plan, you cant have received a discharge from a Chapter 13 bankruptcy within the previous two years or from a Chapter 7, Chapter 11 and Chapter 12 within the previous four years.
Representing Yourself In Court
If you filed Chapter 13 to take advantage of legal strategies such as lien stripping or cramdown, or to combine it with a mortgage modification, you will need to file the appropriate motions with the court and attend hearings. If a creditor objects, the matters could be set for an evidentiary hearing where you will need to present evidence and witness testimony.
While judges often have patience with pro se debtors, all parties, represented or not, have to comply with the rules of evidence. Even if you have a good legal position to win at the hearing, if you can’t get your evidence before the court because your methods do not comply with the evidentiary rules, you’ll lose.
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Mandatory Courses And Filing Fees
When you file your official bankruptcy forms with the court clerk, you’ll pay a bankruptcy filing fee and present a certificate demonstrating that you received the mandatory credit counseling education from an agency approved by the United States Trustee’s office. The session helps evaluate whether you have sufficient income to repay your creditors. You’ll take a second “debtor education” course after filing your case.
You should expect to pay a fee of between $25 and $35 per course because while providers must provide counseling for free or at reduced rates if you cannot afford to pay, Chapter 13 filers rarely qualify for the discount. You’ll find a list of approved credit counseling and debtor education agencies on the U.S. Trustee’s website.
Chapter 7 Vs Chapter 1: Which Should I File
When it comes to filing for bankruptcy, there are generally two options to choose amongst – Chapter 13 bankruptcy is a reorganization whereas Chapter 7 bankruptcy is a liquidation. Choosing which one is right for you depends on your income level and what assets or property you hope to keep. Chapter 13 bankruptcy is generally used by debtors who want to keep secured assets, such as a home or car. In the bankruptcy filing, debtors do not have to lose their secured assets. A chapter 13 bankruptcy allows the debtor to make a repayment plan, making up their overdue payments over the course of 3-5 years and reinstating the original agreement. Also, a debtor may be able to keep valuable nonexempt property with Chapter 13.
However, for the vast majority of individuals who simply want to eliminate their heavy debt burden without paying any of it back, Chapter 7 provides the most attractive choice. This chapter erases things like credit card debt, medical bills, and most civil judgments, though it is not guaranteed that you will be able to keep your expensive property.
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Filing For Bankruptcy To Save Your Property
So, you might ask, can bankruptcy stop foreclosure? It depends on how much equity you have in your home and which type of bankruptcy you file. Chapter 7 bankruptcy doesnât stop foreclosure outright, but it does buy you some time and ultimately allows you to discharge unsecured debts. This may help you get current with your mortgage payments. Paying off your past-due mortgage payments or embracing an alternative âloss mitigationâ strategy are the only ways to prevent a foreclosure in this case. But at the end of the day, the lender can still foreclose if you canât come up with the necessary money.
Rather than eliminating your debts outright, Chapter 13 bankruptcy sets you up on a repayment plan. You can roll your missed mortgage payments into this repayment plan to help you get current on your mortgage. On the payment plan, youâll also be paying less on many of your other debts, and after 3-5 years, remaining balances attached to eligible debts may be discharged.
Some bankruptcy courts even provide a Mortgage Modification Mediation Program to streamline the mortgage modification process. In those districts, filers who are behind on their mortgage can bring the mortgage current through any modification options the lender may have. This then allows them to either dismiss the Chapter 13 case or convert it to one under Chapter 7.
Some Of The Benefits Of Filing For Chapter 13 Bankruptcy Include:
- Stops foreclosure and provides the property owner an opportunity to bring current the arrears over time
- Stops vehicle and mobile home repossessions and may provide an opportunity to restructure these obligations
- Provides relief from student loan collection actions for the duration of the repayment plan
- Provides protection from creditors seeking to collect past-due domestic support obligations
- Provides protection from taxing authorities attempting to collection past-due taxes
- May allow for the stripping off of fully unsecured junior mortgages on residential real property
- May allow for the impairment and discharge of non-support marital obligations
- May allow for the impairment and discharge of unsecured debts
- Allows for the debtor to retain all of their assets
If you are considering filing for Chapter 13 in North Carolina, contact our board-certified North Carolina bankruptcy attorneys today to discuss your options. You may also want to review the basics of North Carolina chapter 13 bankruptcy as established by the government. We will review your case for free, and you do not need to pay us any fees upfront to file a case. Instead, all fees and costs related to the bankruptcy filing can be rolled into your eventual payment plan.
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Chapter 13 Bankruptcy Trustee
The role of the Chapter 13 bankruptcy trustee is different from that of a Chapter 7 trustee. In Chapter 7, the trustees job is to find and assemble the debtors non-exempt assets which become part of the Chapter 7 bankruptcy estate. The Chapter 7 trustee liquidates the debtors non-exempt assets. The Chapter 13 trustees primary role is evaluation and administration of the debtors Chapter 13 payment plan. The Chapter 13 trustee collects the debtors plan payments and distributes the money among the debtors creditors pursuant to the terms of a court-approved Chapter 13 plan. The Chapter 13 trustee is entitled to compensation in the amount of 10 percent the debtors monthly plan payments. The trustee fee may be lowered in some cases to make a plan financially feasible.
What It Means To Represent Yourself
When you represent yourself, you are responsible for researching the law, following the bankruptcy court rules, preparing and filing all of your documents, and making all of the decisions in your case.
When you file for Chapter 13, a trustee is appointed but the trustee is not your lawyer. In fact, the trustee is prohibited from providing you with legal advice and is rarely, if ever, able to respond to calls or emails requesting help with your case. The Chapter 13 bankruptcy trustee will likely notify you if your plan is not in compliance with bankruptcy rules, law, or local procedure, but it will be up to you to correct the problem. Similarly, court employees can answer simple procedural questions but are also not allowed to provide legal advice.
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