What If My Circumstances Change During My Chapter 13 Bankruptcy
Three to five years is a long period of time and it is not uncommon to have a change in circumstances that will impact your bankruptcy. The plan is based on your ability to make the payments, so any change to your income, good or bad, could have an impact. This could involve losing your job, getting a raise or a new job, getting a divorce, or adding more children into your home.
If you do have a change in circumstances that impacts your ability to make payments, you can request a change in your plan by filing for a remedy which can include a Chapter 13 Plan Modification, a Motion to Excuse missed payments or other possible motions. In this scenario, it may be helpful to consult and attorney or Legal Aid to find out your options — as failing to make a payment on your plan could put your entire case at risk of being dismissed.
How Long Does A Chapter 7 Bankruptcy Stay On Your Credit Report
After you file for a Chapter 7 bankruptcy, it remains on your for up to ten years and youre allowed to discharge some or all of your debts. When you discharge your debts, a lender cant collect the debt and youre no longer responsible for repaying it.
If a discharged debt was reported as delinquent before you filed for bankruptcy, it will fall off of your credit report seven years from the date of delinquency. However, if a debt wasnt reported delinquent before you filed for bankruptcy, it will be removed seven years from the date you filed.
How Long Does It Take For Chapter 7 Bankruptcy To Discharge
Chapter 7 bankruptcy is a process that liquidates your assets and repays your creditors to the extent possible. Once you file for Chapter 7 bankruptcy, a meeting of creditors is scheduled. That meeting usually occurs between 21 and 40 days after you file, but must be held within 60 days of the date you filed for bankruptcy. Ten days after that, your bankruptcy trustee reports to the court. The trustee then liquidates your property and pays your creditors. Unless a creditor files a complaint with the court objecting to the discharge, the bankruptcy court will enter a discharge order within two to three months of the creditors meeting. In this best case scenario, it takes between 81 days and 150 days for a discharge to occur. If a creditor objects to discharge or if your petition is denied or converted to Chapter 13, this timeline can be delayed.
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Talk To Cornwell Law Firm Today
There are many facets that go into determining what type of bankruptcy is right for you, including the length of time that the proceeding takes. If you have more questions about filing for bankruptcy in the Duluth area, call the office or contact us at the Cornwell Law Firm today to speak with one of our experienced bankruptcy lawyers and schedule a free consultation of your case.
Why It Might Take Longer To Complete Your Chapter 7 Bankruptcy
Even though in most cases, the court grants a discharge and closes the case in less than five months, things don’t always go that smoothly. How long the delay might take will depend on the type of problem involved.
- Short delay. If you don’t provide information when you should, but you correct the problem quickly, both your discharge and the closure of your case will be delayed briefly .
- Moderate to long delay. If a property issue exists, you’ll likely receive your discharge promptly but your case will remain open while the property issue gets resolved. The length of the delay usually depends on the complexity of the dispute or length of time it takes the trustee to sell the property.
- Long delay. If there’s a question about whether you should receive a discharge, you’ll likely be involved in a bankruptcy lawsuit. Both your discharge and the closure of your case could be delayed by six months to a year.
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Reasons To File For Chapter 13
The main reason for an individual to file for Chapter 13 bankruptcy is to prevent the liquidation of all their assets. In particular, it is frequently used to avoid the forced sale of an individuals home, which Chapter 7 cant do. Chapter 11 may also prevent a forced home sale, but is usually too expensive and complicated a procedure for most people. Of course, not everyone has the choice to use Chapter 13. Having a stable income is a crucial qualifier, and there is that debt limit of $2.7 million as well.
What Debts Can I Include In My Chapter 13 Plan
There are certain expenses that are always included in a Chapter 13 plan. If you are behind on a secured debt like your house or your car, both the ongoing monthly payment and any arrearage will be included.
Finally, your unsecured debts will also be included, and they will receive payments on some, or all of the debts, depending on your ability to pay. You= may end up paying a small percentage of your unsecured debt or all the way up to 100%, depending on your disposable income. Even if you are in a 100% Chapter 13 plan you will save in the long run as there will be no more late fees or interest accruing during the plan.
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Phase : 341 Meeting Date Of Discharge
Remember how the date of the 341 meeting determines a lot of deadlines for the rest of the case? Here is how it works:
341 meeting + 30 days = Deadline for the trustee to object to an exemption you claimed. This deadline starts when the 341 meeting is âconcludedâ which can be delayed if the trustee schedules a follow up meeting.
341 meeting + 60 days = Deadline for creditors to object to having their debt discharged. are not very common in typical Chapter 7 cases, but they do happen.
341 meeting + 45 days = Deadline to deal with secured debts, like car loans .
Once the deadline to object to the discharge has passed, the court will enter the discharge order.
Can the discharge date be delayed?
Yes. If you donât take your financial management course after filing and submit a certificate of completion, the bankruptcy court canât grant your discharge. If too much time passes, the court can close your case.
Other Things That Can Delay The Entry Of The Discharge
When You Need Smaller Monthly Repayment Plan Payments
If you are a below-median income debtor who qualifies for a three-year repayment period, chances are you filed for Chapter 13 bankruptcy to catch up on an obligation that you can’t eliminate in Chapter 7 bankruptcysuch as missed mortgage payments or other priority debt that the debtor must pay back in full. It’s also not uncommon for a debtor not to have enough income to make the monthly payment. In that case, most courts will allow the debtor to submit a longer plan.
Proposing a five-year plan can help you stretch your payments over a more extended period and reduce your monthly plan payment amount. For instance, suppose a debtor must pay $30,000 in support arrears in full through the plan. The monthly payment would be $833 over three years, but only $500 over five years . Find out which obligations you’ll pay back in your plan and which debts get canceled in a Chapter 13 case.
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Typical Chapter 13 Bankruptcy Case
What does a successful Chapter 13 bankruptcy applicant look like?
Consider Steven and Cathy, a married couple with a home that carriers a $150,000 mortgage. Steven works, Cathy doesnt, but they file jointly for Chapter 13 protection. The couple also owes $7,000 on a car loan and has nearly $20,000 in credit card debt.
Two weeks after filing a petition, they submit a Chapter 13 repayment plan that shows how Stevens income can be used to make mortgage and car payments, and can repay part of the unsecured credit card debt. Their plan includes three categories of debt: priority, secured and unsecured.
Priority claims, which must be fully paid, include the cost of the bankruptcy proceeding, some taxes and child support. Secured debts are those with collateral, like a house or a car, also must be paid in full according to the bankruptcy plan. Repayment of unsecured debts, like money you owe on credit and charge cards, is flexible. The judge will review your income and the length of the repayment plan, then decide how much youll owe your unsecured creditors. The amount could range from nothing to complete repayment.
For Steven and Cathy, this means paying all the court costs and whatever back taxes they might owe. It also means they will become current on their mortgage and car payments. But the judge will decide how much theyll need to pay the credit card companies.
Proofs Of Claim From Unsecured Creditors: 90 Days After The Meeting Of Creditors
Within 90 days of the meeting of creditors, any unsecured creditors must file a Proof of Claim with the court if they wish to participate in distributions from the bankruptcy estate. These documents will include information on the amount owed and the basis for the claim.
For example, a collections agency may file a Proof of Claim for surgery that was not covered by your insurance. The agency will need to include the amount still owed and proof that you were the one who incurred the debt.
You and your attorney can object to a creditorâs claim by arguing that the paperwork was not submitted correctly, the amount of the claim is incorrect, or the claim was made with the purpose of harassing you.
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What Happens To My Student Loans After Chapter 13
Debts are classified as priority, secured, and unsecured. Secured claims might be for a car loan because the creditor could take the car back if the loan isnt paid. Unsecured debts are the lowest priority debt.
Student loans are classed as unsecured. This means you might not have to pay all your student loan debt, and some will be discharged.
However and this is important you need to talk to an attorney about this as soon as possible. Your disposable income figures into how much debt is repaid. The calculations are complex and easy to misunderstand. And it is notoriously difficult to discharge student loan debt unless you can demonstrate a serious hardship.
Chapter 11 Vs Chapter 13 Bankruptcy: An Overview
There are some notable differences between Chapter 11 and Chapter 13 bankruptcy, including eligibility, cost, and the amount of time required to complete the process. Both bankruptcies give debtors the opportunity to stay in business and restructure their finances.
Barring some limitations, both bankruptcies allow filers to modify their payment terms on secured debts, provide time to sell assets, and eliminate obligations the filer cannot pay over the plans term. While both allow the discharging of debts, more debts can be discharged under Chapter 13.
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Changes Due To The Covid
The Coronavirus Aid, Relief, and Economic Security Act, signed into law by the president on March 27, 2020, made a number of changes to bankruptcy laws designed to make the process more available to businesses and individuals economically disadvantaged by the pandemic. These include raising the Chapter 11 Subchapter 5 debt limit to $7,500,000, excluding federal emergency relief payments due to COVID-19 from current monthly income in Chapter 7 and Chapter 13 and disposable income in Chapter 13, and allowing Chapter 13 repayment plans to be extended to seven years. The changes apply to bankruptcies filed after the CARES Act was enacted and sunset one year later.
How To Write A Bankruptcy Letter
Alternatively, you may be asked to email your letter. Send it as an attachment or stick to proper letter formatting in the email that you send. Check for errors in spelling, grammar and punctuation before sending the letter. I am writing to explain the circumstances of my bankruptcy filing from 2018.
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How Often Can You File For Bankruptcy
The frequency of applying for bankruptcy depends on which type of bankruptcy youre filing, something known as the 2-4-6-8 rule. Heres a breakdown:
- Filing Chapter 13 after Chapter 13: two years.
- Filing Chapter 13 after Chapter 7: four years.
- Filing Chapter 7 after Chapter 13: six years.
- Filing Chapter 7 after Chapter 7: eight years.
Filing Chapter 13 immediately after Chapter 7 is also referred to as Chapter 20 bankruptcy. You wont receive a discharge when filing Chapter 20, since you arent waiting the full four years between Chapter 7 and Chapter 13, but this type of filing could give you the time you need to pay down debt.
How Long Does A Bankruptcy Case Take
Every bankruptcy case is unique, and it is difficult to predict exactly how long your bankruptcy case will take. The amount of time a bankruptcy case takes from start to finish depends on which type of bankruptcy you filed for and your unique circumstances.
These factors can either hasten or delay bankruptcy proceedings. Typically, chapter 7 bankruptcy takes less time than chapter 13 bankruptcies, which are more complex and usually last between three and five years.
If you are a business owner filing for chapter 11 bankruptcy, the process will likely be complicated and time-consuming.
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Advantages Of Chapter 13
Chapter 13 offers individuals a number of advantages over liquidation under chapter 7. Perhaps most significantly, chapter 13 offers individuals an opportunity to save their homes from foreclosure. By filing under this chapter, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time. Nevertheless, they must still make all mortgage payments that come due during the chapter 13 plan on time. Another advantage of chapter 13 is that it allows individuals to reschedule secured debts and extend them over the life of the chapter 13 plan. Doing this may lower the payments. Chapter 13 also has a special provision that protects third parties who are liable with the debtor on “consumer debts.” This provision may protect co-signers. Finally, chapter 13 acts like a consolidation loan under which the individual makes the plan payments to a chapter 13 trustee who then distributes payments to creditors. Individuals will have no direct contact with creditors while under chapter 13 protection.
Review Your Credit Reports
Monitoring your credit report is a good practice because it can help you catch and fix credit reporting errors. After going through bankruptcy, you should review your credit reports from all three credit bureausExperian, Equifax and Transunion. Due to Covid-19, you can view your credit reports for free weekly through April 20, 2022 by visiting AnnualCreditReport.com.
While reviewing your reports, check to see if all accounts that were discharged after completing bankruptcy are listed on your account with a zero balance and indicate that theyve been discharged because of it. Also, make sure that each account listed belongs to you and shows the correct payment status and open and closed dates.
If you spot an error while reviewing your credit reports, dispute it with each credit bureau that includes it by sending a dispute letter by mail, filing an online dispute or contacting the reporting agency by phone.
The Chapter 13 Process
The Chapter 13 filing process generally takes 95 days from the filing of the petition to the approval of the repayment plan. But the bankruptcy wont actually be discharged until the three- to five-year plan is completed.
Heres what to expect over a typical Chapter 13 bankruptcy proceeding.
- A list of creditors and how much is owed to each
- Evidence of income
Chapter 13 Vs Chapter 7
Chapter 13 bankruptcy is often called the wage earners bankruptcy. A petitioner must have regular income to enter a Chapter 13 debt repayment plan. This form of bankruptcy is mostly beneficial to consumers with valuable assets and a high source of income.
Chapter 7 bankruptcy is designed for those who truly cant afford to repay their debts. It is, by far the most common type of bankruptcy with 483,988 filings in 2019 compared to 283,413 Chapter 13 filings.
In Chapter 13 bankruptcy, you retain your assets while extending repayment of debts over a 3-5-year period. In Chapter 7, your assets are liquidated except those that are exempt such as your house and car and turned over to a court-appointed bankruptcy trustee, who sells them and uses the proceeds to pay off creditors. The rest of the debt is discharged.
To qualify for Chapter 7, you must earn less than the median income in your state for a family of your size. Filers who dont pass the means test can look to Chapter 13 instead.
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