We Can Help You Discharge Overwhelming Debt Through Bankruptcy
Filing bankruptcy does not have to be a daunting process. Our team represents individuals and small business owners who need the debt relief of Chapter 7 bankruptcy. Contact a case review team member today to find out how long it takes to do a Chapter 7 bankruptcy and how soon you might expect to benefit from a fresh start. Call to reach the Rutherfordton office at Farmer & Morris Law, PLLC, today.
How Does Filing Bankruptcy Impact Credit
Your credit may not be in tip-top shape by the time you consider filing for bankruptcy, since high balances and missed payments are the top factors affecting your credit score. Still, the presence of a bankruptcy on your credit report will severely impact your credit scores and creditworthiness the entire time it is on your report. That impact will lessen as time passes, however. Chapter 7 bankruptcy remains on your report for up to 10 years, and Chapter 13 stays there for up to seven years.
It’s not an ideal credit situation, of course, but you can use the time to manage your debts wisely and make consistent on-time payments. Like with any damage to your creditworthiness, it’s possible to rebuild your credit with some focus and patiencealong with using the debt relief provided by the bankruptcy to get back on track financially.
Meeting Of Creditors In Chapter 13 Bankruptcy
There will be a meeting of creditors between 20-50 days after you file bankruptcy.
During this meeting, you can expect to:
- Ask questions
- Answer questions from your creditors
- Be put under oath
- Review the repayment plan you created
- Find solutions to problems with your plan or concerns about the debt
If you filed jointly, you and your spouse should both attend this meeting. The judge will not be present at this meeting. They will rule on the case later.
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How Long Does It Take To File Chapter 13 Bankruptcy
The decision to file bankruptcy is a weighty one. And if youre unsure how it works, starting the process could be both intimidating and overwhelming. So how long does it take to file Chapter 13 bankruptcy? And what can you expect during the timeline?
Phase : Filing Date 341 Meeting Of Creditors
The 341 meeting is scheduled about 30 days after the petition date. The meeting itself typically takes less than 10 minutes to complete.
While waiting for your 341 meeting, youâll likely hear from your trustee. Theyâll let you know what documents they need from you to prepare for your 341 meeting. As long as youâve kept the documents you used when preparing your bankruptcy forms, doing this shouldnât take very long.
Most filers also get the financial management course out of the way while they wait for their 341 meeting. Bankruptcy law requires every person filing bankruptcy to complete this education course. It tends to be a little longer than the first course, usually around 2 hours.
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Life After Chapter 13 Bankruptcy
Once the court approves a repayment plan, it is up to the debtor to make the budget plan work. Failure to make agreed-upon payments will bring the matter back to court for further review, which could include selling the debtors property to pay debts. Alternatively, the trustee can simply request the case be dismissed.
Bankruptcy may give debtors a breather from creditors, but there is a penalty to be paid on their . Under the federal Fair Credit Reporting Act, a Chapter 13 bankruptcy will be listed on the report for seven years. Debtors in this situation may find it difficult to get additional credit for years.
Chapter 13 bankruptcy can be a useful financial tool for people with serious debts who worry about losing their homes to bankruptcy. Anyone considering this course should consult a bankruptcy lawyer.
Ohio Chapter 13 Bankruptcy Lawyer
Many people view bankruptcy as a last-ditch effort to resolve their overwhelming debt. While bankruptcy may seem like a drastic step, Chapter 13 bankruptcy often serves as a soft-landing.
For those who choose Chapter 13 bankruptcy, Ohio state law protections can help you keep your property. You can also begin to repay your creditors and get back on the road to financial health.
You do not have to try it alone. Contact Amourgis & Associates, Attorneys at Law, today and talk to one of our Ohio Chapter 13 bankruptcy attorneys. We can explore whether Chapter 13 bankruptcy might help in your current situation.
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How To Get A Chapter 13 Discharge
The bankruptcy law regarding the scope of the Chapter 13 discharge is complex and can change from time to time. A Chapter 13 debtor can have a discharge upon completion of all payments under the Chapter 13 plan so long as the debtor:
The discharge releases the debtor from all debts provided for by the plan or disallowed , with limited exceptions. Creditors provided for in full or in part under the Chapter 13 Plan may no longer initiate or continue any legal or other action against the debtor to collect the discharged obligations.
Changing A Plan Length When Circumstances Change
Five years is a long time. It’s normal for things like job losses and medical issues to happen. If your circumstances change, you might be able to modify your Chapter 13 plan length, with the court’s approval.
Many things go into drafting a Chapter 13 plan. In fact, most attorneys use a computer program to do the calculations. The best way to find out your obligations and options is to consult with a knowledgeable bankruptcy attorney.
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Chapter 13 Discharge Frequently Asked Questions
How long does a Chapter 13 discharge take?
Once the discharge process begins, it can take 6-8 weeks for the discharge to occur. This process starts once you have completed your payment plan over 3-5 years and meet all other requirements. The Chapter 13 Trustee will do a final audit to make sure all payments have been completed.
Are any debts discharged in Chapter 13?
To better understand what a discharge means under a Chapter 13 bankruptcy, it is important to know what types of debt are dischargeable and what are your debt obligations.
Priority debt is difficult to remove from your payment plan. Most dischargeable debt is considered a non-priority and often unsecured debt. Examples of dischargeable debt includes:
- medical bills
- personal loans from family or friends
- past-due utility bills.
In most cases, once you complete your Chapter 13 payment plan, you are relieved from this debt. If your dischargeable debt is secured, you must either continue making your payments on it during your bankruptcy or you can surrender the collateral asset .
Can a Chapter 13 be Discharged Early?
There are four ways in which you can get a Chapter 13 discharged early:
How will my credit score be affected after a Chapter 13 discharge?
While you are in a Chapter 13, a notation will be on your credit report. That notation will clear from your credit report 2-4 years after your discharge.
How Does Bankruptcy Work
Bankruptcy is a method to eliminate or at least reduce your debt when bills pile up beyond your ability to repay them. It should be viewed as a last resort to be considered only when all other potential courses of action to get back on track have been exhausted.
Individuals filing for bankruptcy mostly use either Chapter 7 or Chapter 13. The biggest difference between the two is what happens to your property:
- Chapter 7, which is known as liquidation bankruptcy, involves selling some or all of your property to pay off your debts. This is often the choice if you don’t own a home and have a limited income.
- Chapter 13, also known as a reorganization bankruptcy, gives you the chance to keep your property if you successfully complete a court-mandated repayment plan that lasts between three and five years.
Depending on where you live and your marital status, some of your property may be exempt from being sold when you file Chapter 7 because of state-specific and federal exemptions. With exemptions, whether they be your home equity, retirement accounts or even personal possessions such as jewelry, you receive the allowed exemption amounts, and the rest of the proceeds will be used to pay off debts. You can read more about potential exemptions, and check out this chart for a quick rundown on the two types:
- Child support or alimony
- Student loans
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The Chapter 13 Discharge
The bankruptcy law regarding the scope of the chapter 13 discharge is complex and has recently undergone major changes. Therefore, debtors should consult competent legal counsel prior to filing regarding the scope of the chapter 13 discharge.
A chapter 13 debtor is entitled to a discharge upon completion of all payments under the chapter 13 plan so long as the debtor: certifies that all domestic support obligations that came due prior to making such certification have been paid has not received a discharge in a prior case filed within a certain time frame and has completed an approved course in financial management . 11 U.S.C. § 1328. The court will not enter the discharge, however, until it determines, after notice and a hearing, that there is no reason to believe there is any pending proceeding that might give rise to a limitation on the debtor’s homestead exemption. 11 U.S.C. § 1328.
The discharge releases the debtor from all debts provided for by the plan or disallowed , with limited exceptions. Creditors provided for in full or in part under the chapter 13 plan may no longer initiate or continue any legal or other action against the debtor to collect the discharged obligations.
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.
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What Is Chapter 13 Bankruptcy
Chapter 13 is when you have to report all of your debt and income and then you work with a bankruptcy trustee, your creditors, and the court to create a payment plan.
Under Chapter 13 you get an allowance for living expenses and payments of your secured debt while the remainder from each month goes to the bankruptcy trustee. The trustee then disperses the money among your creditors.
Now it may seem silly to file for bankruptcy and still have to pay a monthly payment but there are plenty of upsides to Chapter 13 bankruptcy.
For starters, you will never be forced to pay more than you make. It is completely dependent on your income, not your debt. Chapter 13 also comes with an automatic stay, which means creditors cannot move against you for collection.
And the best part about Chapter 13 is that at the close of your payment plan, the rest of your unsecured debt will be forgiven, meaning you will have paid substantially less for your debt.
Eligibility For Chapter 13
Chapter 13 bankruptcy has its own set of rules and eligibility requirements. Business entities cannot file for Chapter 13 bankruptcy, although Chapter 11 bankruptcy may provide similar relief for a business. Only individuals or married couples can apply.
To qualify for a Chapter 13 bankruptcy, you must show that you are eligible for this form of relief. You must establish that:
- You did not have a prior bankruptcy application dismissed within the previous 180 days
- You have completed the Credit Counseling Requirement
- You filed your tax returns for the past four years
- The proposed plan repays all required debts
- The proposed plan will repay specific amounts to unsecured creditors
- You have enough income to cover mandatory payments to priority and unsecured creditors
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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 Ã¢concludedÃ¢ 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 donÃ¢t take your financial management course after filing and submit a certificate of completion, the bankruptcy court canÃ¢t grant your discharge. If too much time passes, the court can close your case.
Other Things That Can Delay The Entry Of The Discharge
How Bankruptcy Impacts Your Credit
, but it may not be as long as you think. While bankruptcy can impact your credit score for a while, time heals your credit reports.
If you filed Chapter 13 bankruptcy, the good news is that your bankruptcy is only listed on your credit reports for up to seven years, starting from the date that you file. Since Chapter 13 typically lasts either three or five years, you only have two to four years of it being reported on your credit reports if everything goes well. Once it falls off, thats it no more negative impact from the bankruptcy on your credit score.
Chapter 7, though, can remain on your credit report for up to ten years starting from the date you file. This type of bankruptcy is much shorter, generally only lasting four to six months. Its known as the liquidation bankruptcy and your assets are sold to repay your creditors, unlike in Chapter 13 where you work with your trustee to repay your debts. For this reason, Chapter 7 sticks around on your credit reports longer.
However, even if your bankruptcy is set to impact your credit reports for a few more years, it doesnt mean that its impact stays the same during that time. Negative marks lose some of their potency with each passing year, including bankruptcy. It could take a few years for your credit score to fully recover from bankruptcy, but there are some tips we can offer to start you off in the right direction.
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Eligibility For Chapter 13 Bankruptcy
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.
Myth: Chapter 13 Usually Will Improve Your Budgeting Skills
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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Chapter 11 Bankruptcy Lawyer
Its not a matter of if, its a matter of when. Legal problems come to everyone. Whether its your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sisters brother whos getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation 676-5506. We want to help you!
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