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How Does Filing Chapter 13 Bankruptcy Work

Chapter 13 Bankruptcy In Florida

How Does Chapter 13 Bankruptcy Work?

Chapter 13 bankruptcy is a court-supervised payment plan whereby the bankruptcy debtor pays his secured and unsecured; a monthly amount based upon the debtors family income and reasonable expenses. The amount of monthly payments and the amounts paid to various creditors makes up the debtors Chapter 13 plan.

A Florida Chapter 13 has some advantages over a;Chapter 7 bankruptcy. The debtor does not have to liquidate assets in Chapter 13 as he does in Chapter 7. Chapter 13 bankruptcy;permits debtors to modify or eliminate some secured debts. Chapter 13 is used to stop a mortgage foreclosure and permit the debtor to catch up past due mortgage payments. Also, Chapter 13 permits discharge of some unsecured debts not dischargeable in a Chapter 7.

Negotiate With Your Lender

Car lenders make most of their money through interest payments on your loan. Most lenders would rather have you keep the car and continue making payments instead of repossessing it. If you are in default, consider negotiating with your lender to work out a way for you to cure your default and keep the car. Your lender may be willing to reduce your payments, interest rate, or even principal balance because bankruptcy will discharge your obligation to pay any remaining loan balance if your car is repossessed. But keep in mind that the new loan agreement will be a reaffirmation of the debt which means you will remain personally liable on the loan despite your bankruptcy discharge.

Las Vegas Low Cost Ch 13 Bankruptcy Attorney

Our Las Vegas Bankruptcy Lawyers has a reputation for providing Nevada and Las Vegas clients with legal service at an affordable cost.; Our attorneys have expertise in the Nevada bankruptcy law and our experience filing bankruptcy cases in Vegas.; Thus, we want to ensure that bankruptcy is indeed the most beneficial way to handle your debt.; We also offer a FREE consultation and debt evaluation that can be done in office, or over the phone.; Contact our Clark County debt relief law firm and get the assistance your seek.

Also Check: How To File For Bankruptcy For Credit Card Debt

How To Approach The Creation Of Your Repayment Plan

The calculation of the Chapter 13 repayment plan can be a complicated process full of uncertainty.

For this reason, we strongly suggest working with a lawyer to determine your eligibility and to draw up the particulars of your repayment plan. These legal proceedings are not an area where you want to make any avoidable mistakes that could lead to more difficulties piled on top of a bankruptcys usual stresses.

Still, its still worth knowing the basics of the process before meeting with your lawyer so that you can be a fully engaged participant in those discussions. The beginning calculation process features two primary stages the Chapter 13 means test and the creation of the plan itself.

What Are The Steps To Filing A Chapter 13 Bankruptcy

Chapter 7 or Chapter 13 Bankruptcy: Which Should You File ...

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.

Read Also: Does Chapter 13 Bankruptcy Cover Student Loans

What If I Need To Get A New Car Or Incur New Debt After I File

If you need to purchase a new vehicle, change residences, or renew a new lease, please contact our office immediately.; Prior to incurring new debt, the approval of the Chapter 13 Trustee should be obtained.

For more information on the protections available under Chapter 13 bankruptcy, schedule a FREE CONSULTATION with Detroit Lawyers.

Contact Bridges Jillisky Streng Weller & Gullifer Llc Today

The decision to file for bankruptcy is an important one that requires thorough consideration about both the advantages and disadvantages. If you are interested in filing for Chapter 13 bankruptcy or would like to discuss the process with an experienced attorney, reach out to Bridges, Jillisky, Streng, Weller & Gullifer, LLC today. We can provide the legal guidance you need to make the right financial decision for your situation.

Also Check: How To File Bankruptcy With No Money

How Chapter 13 Works

A chapter 13 case begins by filing a petition with the bankruptcy court serving the area where the debtor has a domicile or residence. Unless the court orders otherwise, the debtor must also file with the court: schedules of assets and liabilities; a schedule of current income and expenditures; a schedule of executory contracts and unexpired leases; and a statement of financial affairs. Fed. R. Bankr. P. 1007. The debtor must also file a certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling; evidence of payment from employers, if any, received 60 days before filing; a statement of monthly net income and any anticipated increase in income or expenses after filing; and a record of any interest the debtor has in federal or state qualified education or tuition accounts. 11 U.S.C. §;521. The debtor must provide the chapter 13 case trustee with a copy of the tax return or transcripts for the most recent tax year as well as tax returns filed during the case . Id. A husband and wife may file a joint petition or individual petitions. 11 U.S.C. §;302.

In order to complete the Official Bankruptcy Forms that make up the petition, statement of financial affairs, and schedules, the debtor must compile the following information:

  • A list of all creditors and the amounts and nature of their claims;
  • The source, amount, and frequency of the debtor’s income;
  • A list of all of the debtor’s property; and
  • Myth: Chapter 13 Usually Will Improve Your Budgeting Skills

    How Does A #Chapter 13 #Bankruptcy Case Work

    Another argument made in favor of Chapter 13 is that it teaches you to live within a budget.

    âWith a Chapter 7, wham bam itâs over, and theyâre back to the same old thing, the bad habits that got them in trouble to begin with,â says Arthur Ray, a bankruptcy attorney in Memphis. By contrast, says Ray, âa Chapter 13 shows people how to live without buying things for that 60-month plan.â

    Thatâs definitely true for the 33% of cases where Debtors actually complete their plans. But, as we know, most debtors donât complete their 3-5 year plan.

    For those cases that fail, there is no lasting debt relief and most likely no lasting budgeting improvement either.

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    How Chapter 13 Bankruptcy Works

    Once you file for Chapter 13 bankruptcy, youll be assigned a trustee who will help you set up meetings with your creditors and create a payment plan for all or some of your debts over a period ranging from three to five years. The terms of your plan will depend on your income and your debts.

    Advantages of Chapter 13 bankruptcy include:

    • Potentially saving your home from foreclosure.
    • Rescheduling secured debts for lower payments.
    • Financial protection of any co-signers.

    What Is Chapter 7 Bankruptcy

    Chapter 7 of the U.S. Bankruptcy Code is a form of bankruptcy for people with very limited income. To qualify for Chapter 7 bankruptcy, you have to pass a means test that shows your income falls below a number set by your state. To find out more about the means test and your states income levels, visit the Department of Justice website.

    If you file for Chapter 7 bankruptcy, youll be able to wipe out unsecured debts .

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    California Bankruptcy: Chapter 7 And Chapter 13

    Laws of both Chapter 7 and Chapter 13 Bankruptcy involve individuals. However, there are fundamental differences between the two, as discussed below.

    Chapter 7 Bankruptcy

    Chapter 7 Bankruptcy also denoted as Liquidation Bankruptcy, allows the debtor to wipe out various debts and make a fresh start. Generally, individuals with large credit card debts and;unsecured loans;with few assets choose Chapter 7 Bankruptcy. It allows the discharge of various liabilities except for child support, alimony, student loans, specific taxes, and fraudulent debts.

    Chapter 13 Bankruptcy

    Chapter 13 Bankruptcy;is understood as reorganization Bankruptcy because debtors can reschedule their debt payments to manage their current financial crisis. It allows debtors to;prevent a house foreclosure;or make up for a missed car loan repayment. It also allows one to avoid interest from accruing on ones tax debt. It is the ideal bankruptcy for those who prefer to retain their secured assets.;It proves useful when the debtor has valuable non-exempt property and a steady income source.

    An adequate understanding of Chapter 7 and Chapter 13 Bankruptcy laws will provide clear guidance in the matter.

    Eligibility For Chapter 13 Bankruptcy

    How Does a Chapter 13 Bankruptcy Discharge Work?

    Individuals are eligible for Chapter 13 relief if their unsecured debts are less than $419,275 and secured debts are less than $1,257,850. Amounts change every three years based on the consumer price index and the current numbers will remain in effect until April 2022.

    Only individuals or husbands and wives who file jointly, are eligible for Chapter 13 bankruptcy. Businesses arent eligible for Chapter 13. They must file under;Chapter 11 bankruptcy or Chapter 7.

    Those wishing to file for Chapter 13 must prove that they have filed state and federal income taxes for the previous four years.

    You cant file under Chapter 13, or any other chapter, if a previous bankruptcy petition was dismissed within the last 180 days because you failed to appear in court or comply with the orders of the court or if the petition was voluntarily dismissed by creditors.

    Individuals must receive credit counseling from an;EOUST-approved credit counseling agency, like InCharge Debt Solutions, at least 180 days prior to filing for Chapter 13. The EAOUST is the executive office for United States Trustees.

    There are exceptions in emergency situations or where the U.S. Trustee has determined that there are insufficient approved agencies to provide the required counseling. If a debt management plan is developed during required;, it must be filed with the court.

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    Possible Additional Debt Which May Be Required To Be Paid Through The Bankruptcy Plan

    Unsecured debt .

    In addition to the funds that are required to be paid to the trustee on a monthly basis for your mortgage arrears and/or auto finance arrears and/or for the priority items listed above, a debtor may be required to pay all, some or none of the amount due to unsecured creditors.

    In general, the court determines the amount required to be paid to the unsecured creditors based on the following factors: value of assets, in excess of liens; means test result; and, the present and future disposable monthly income. In a nut shell, the court adds all of the unsecured debt and looks to three factors to determine, how much, if any of this debt, a debtor is required to pay, through the monthly trustee payment. Any amount required to be paid, is divided by the number of months of the plan and added to the other funds that must be paid.

    Attend Your 341 Meeting Of Creditors And Your Confirmation Hearing

    Approximately a month after you file your bankruptcy petition, youâll meet with your Chapter 13 trustee. Donât worry, you wonât be meeting the judge assigned to your case on this day! Your creditors, however, do have a right to be at your 341 meeting, but they very rarely show up.

    At the meeting with your trustee, youâll be required to verify your identity and provide supporting documents. Your trustee is tasked with reviewing your supporting documents and using the testimony in your meeting to make sure your bankruptcy forms are filled out correctly and that your proposed plan is feasible.

    The next appearance you have to make is at your confirmation hearing. You WILL have to appear in front of a judge on this day. The judge will decide whether to confirm your Chapter 13 plan and allow your case to move forward. If there are no objections by either your trustee or your creditors, your case will be confirmed.

    Also Check: How Long Does It Take To Finalize Bankruptcy

    How Chapter 7 Bankruptcy Works

    Once you file for Chapter 7 bankruptcy, the court selects a trustee for your case. Part of the trustees responsibilities include selling off certain types of your assets. That money will be used to pay your creditors.

    Property that could be liquidated under Chapter 7 includes:

    • Cash.
    • A second home.
    • A second vehicle.

    Some of your assets may escape the chopping block, though. Exempt assets may include your primary home, the car you use for work, equipment you use just for work, Social Security checks, pensions, veterans benefits, welfare and retirement savings accounts.

    In General The Process Of Filing For Chapter 13 Bankruptcy Includes:

    How Does a Chapter 13 Bankruptcy Work – Overview
    • Determining whether you fall within the Chapter 13 debt limit. This is the dollar amount limit on how much debt an individual can have and file a Chapter 13 reorganization case. As of April 1, 2019 debt limits are increased, in order to qualify to file a wage earner plan reorganization case, you must not exceed the current limit of $419,275 in unsecured and $1,257,850 in secured;debts.
    • Filing a Chapter 13 bankruptcy petition, which triggers an automatic stay, providing immediate legal protection from creditors.
    • Submitting an individualized plan that details proposed payments and how the various debts will be treated.
    • Attending a 2 hour financial management course;on the internet or in person. This is required to be taken prior to your discharge.
    • Attending a meeting of creditors, also known as a 341 meeting. Here, with the help of your attorney, you will answer questions about your debts and your proposed payment plan. You may also make adjustments to your plan during this meeting.
    • Confirmation of the plan. The plan must be confirmed by the North Carolina bankruptcy judge. Although many plan confirmations are not contested, a party in interest such as a trustee or creditor may object to confirmation which would necessitate a hearing.

    If the North Carolina Bankruptcy Court confirms the plan, the debtor must perform as proposed in the plan. Often, payments are made through payroll deduction. If the debtor does not perform under the plan, the case will be dismissed.

    Read Also: When Should You File For Chapter 7 Bankruptcy

    What To Consider Before Filing For Bankruptcy

    Filing for bankruptcy is not a good idea for everyone. It is a serious step, and you should only file for bankruptcy if you know it will help you. You should talk to a lawyer before filing if possible.

    Reasons to file:

    • Debts can be discharged , giving you a fresh start;
    • Bankruptcy stops wage garnishment and harassment by collection agencies;
    • Foreclosures and repossessions are stopped and cannot move forward unless the court allows;
    • You can keep exempt property;
    • You can stop utility shutoffs, or restore service after paying a reasonable deposit, then pay only for current service;
    • Employers and public agencies cannot retaliate against you for filing bankruptcy; and
    • If your driver’s license was suspended for not paying a debt that is dischargeable in bankruptcy, you could get your license reinstated.

    Reasons against filing:

    • Some debts, like student loans, might not be discharged ;
    • Bankruptcy stays on your credit rating for 7 to 10 years;
    • Getting credit may be harder or more expensive;
    • It can cause strain in relationships with some creditors and cosigners;
    • You may have to return property that is not paid for ; and
    • You may be able to protect your income and property without filing bankruptcy.

    Filing for bankruptcy will not help you if you are collection proof. You are collection proof from non-government creditors if all of the following are true:

    Chapter 13 File Limitations

    Although Chapter 13 Bankruptcy is a good option for some debtors, it is not available to everyone. The most important criteria for a person to be eligible to file for Chapter 13 Bankruptcy is the ability to maintain adequate income for the payment into their Chapter 13 plan. Again, repayment takes anywhere from 3-5 years.

    To file for Chapter 13, a debtor must show that he or she has filed both federal and state income tax returns during the three years prior to the bankruptcy filing date. The court may postpone bankruptcy proceedings to allow additional time for the debtor to become current on tax filings. The court will dismiss the case if the returns, or proof of the returns, are unable to be produced.

    Also Check: Who Can File Chapter 7 Bankruptcy

    Talk To A Bankruptcy Lawyer

    Need professional help? Start here.

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    Contact A Waukesha Bankruptcy Lawyer Today For Assistance

    How Does A "Chapter 20" Bankruptcy Work?

    Whether you are currently in the midst of fighting to retrieve your property or you are considering filing for bankruptcy in order to keep your car and you do not know where to turn, contact the experienced bankruptcy lawyers at Burr Law Office today for assistance. Our team handles both Chapter 7 and Chapter 13 bankruptcies in Milwaukee, Waukesha, and the surrounding communities throughout southeast Wisconsin. We can discuss your case, review your situation, and provide you with the option we feel will lead to the best possible outcome. To learn more about our Waukesha bankruptcy law firm or to schedule a consultation, call us today at Call .

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