When Will My Debts Be Discharged
Because Chapter 13 bankruptcies involve repayment plans that can take 3-5 years to complete, it takes four years on average to discharge remaining debts.
In a situation in which you lose your job, you can try to have your plan modified. You need to inform your trustee of your financial situation before you miss payments, otherwise you risk having your case dismissed.
If a serious injury or illness occurs while enrolled in Chapter 13, you may qualify for a hardship discharge. Thats only the case if the hardship was beyond the debtors control, creditors received at least as much as they would under Chapter 7 and modifying the plan isnt possible.
Will A Chapter 13 Bankruptcy Discharge My Student Loan Debt
A bankruptcy court almost always makes you repay student loan debt. Chapter 13 bankruptcy rules treat student loan debt just like a priority debt â it must be paid back in full . Student loan debt is only dischargeable upon a showing of “undue hardship.”
Typically, it is difficult to convince a bankruptcy court of undue hardship. They will consider factors like:
- Permanent illness or disability
- A good-faith effort to repay the loan
To have a student loan debt dismissed, you must file a separate action in bankruptcy court â called a “Complaint to Determine Dischargeability of a Debt.”
Average Chapter 13 Bankruptcy Attorney Fees
Under Chapter 13, youll work with the Trustee to create a payment plan for your debts. The plan will last for three to five years and at the end of it, your remaining unsecured debt is discharged. Unlike under Chapter 7, local bankruptcy law usually sets the presumptively reasonable attorney fees for Chapter 13 cases. If the attorney charges the presumptively reasonable fee, the Court wont look into the charges unless you specifically request it.
Presumptively reasonable fees vary based on the complexity of your case. Nationally, the average is around $3,000, but each bankruptcy district has its own standards and rules. In San Francisco, for example, the presumptively reasonable attorney fee is $3,500 for the basic case, plus anywhere from $500 to $1,500 extra for various issues that add complexity to the case. In the eastern district of North Carolina, its $3,700 plus extra fees for complications. In central Alabama, the presumptively reasonable fee is $2,750, and any extra fees will be examined by the court.
For Chapter 13 cases, attorneys generally charge a certain fee up front. Some attorneys will charge only the filing fee and others will want a larger down payment. Youll pay the rest of your attorney fee through the Chapter 13 plan. Youll make your regular plan payments to the Bankruptcy Trustee every month and the Trustee will pay the appropriate portion to your lawyer.
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Filing Chapter 13 Bankruptcy
Chapter 13 allows debtors to repay all, or a significant portion, of their debts in 3-5 years under a court-ordered plan. The most common debts discharged in a Chapter 13 proceeding are medical bills, credit card debt and personal loans.
If the court accepts your repayment plan, creditors are forbidden to continue collection efforts. You also should get relief from;collection agencies;and their barrage of phone calls and letters.
To be clear: Chapter 13 is not what people typically think of when they think bankruptcy. It isnt wiping the slate clean and starting all over again. Unsecured debts, like alimony, child support, student loans and taxes must be paid in full and payments on things like house and car, must be kept current during your repayment period.
Chapter 13 as a repayment plan that a bankruptcy court trustee administers. Typically, a petitioners attorney creates the plan that allows payment of key debts over several years. At the end of that period, unsecured debts that remain unpaid are discharged.
Oct How Does A Chapter 13 Bankruptcy Trustee Get Paid
A Chapter 13 is a bankruptcy reorganization for individualsa payment plan, in other words. The bankruptcy court appoints a trustee and the trustee collects payments from debtors, and distributes that money to creditors. So, how does the Chapter 13 trustee get paid?
The Chapter 13 trustee is paid a percentage of what she collects from you and distributes to your creditors. That last part is importantif she collects too much from you and has to refund it, she doesnt get to keep that. She is only paid based on what is paid to creditors. The amount of the trustees commission varies from time to time and district to district, and is re-set periodically. The maximum commission is 10% of distributions, and the trustee must pay administrative expenses out of that. In addition, the trustees personal compensation is capped. The cap is slightly less than the compensation paid to certain judicial officials, including bankruptcy judges.
One of the important ways that experienced bankruptcy counsel can help you is by familiarity with the trustee commission. Obviously, you dont want to pay a higher plan payment than you need to pay. But, not only is that commission a factor in determining how much your Chapter 13 plan payments will be, it is also a factor in determining whether you qualify for Chapter 7.
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Disadvantages Of Filing For A Chapter 13 Bankruptcy
It can take up to five years for you to repay your debts under a Chapter 13 plan Debts must be paid out of your disposable income, which is whatever income you have left over after necessities are paid. All of your extra cash is thus tied up during the entire repayment plan. A Chapter 13 bankruptcy can remain on your credit report for up to 10 years Youll lose all your Bankruptcy will make it nearly impossible to get a mortgage, if you dont already have one. You cant file for Chapter 7 bankruptcy if you previously went through bankruptcy proceedings under Chapter 13 within the last six years Declaring bankruptcy under Chapter 13 now will make it harder to declare under Chapter 7 later Bankruptcy wont relieve you of your obligations to pay alimony and/or child support Bankruptcy wont get rid of your student loan debt Youll have to explain to a judge or trustee how you got into your situation
You cant file for Chapter 13 bankruptcy if a previous Chapter 7 or Chapter 13 case was dismissed within the past 180 days because: You violated a court order OR You requested the dismissal after a creditor asked for relief from the automatic stay
How Long Does Chapter 13 Bankruptcy Take
Chapter 13 plans extend over three to five years. The length of your plan will depend on your income and how much time you need to make the payments. Before you start making payments, however, the court has to approve your plan. For half of our readers, this process took three months or less. It took more than six months for only one in ten readers.
Even though it takes years to finish paying off a Chapter 13 plan, nearly nine in ten readers told us that as soon as they started the process, they got immediate relief from one troublesome feature of financial troubles: phone calls from debt collectors. That’s because once you file the petition, the court will issue what’s known as an “automatic stay,” which orders creditors to stop trying to collect their money.
Satisfaction Levels With Chapter 13 Bankruptcy
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How To Follow The Repayment Plan
Once your plan is approved, most of your payment interactions should take place with your bankruptcy trustee. This individual is appointed shortly after the initial bankruptcy filing and essentially acts as a go-between for you, the bankruptcy court and your creditors.
Your payment goes to the trustee on the approved schedule , and they are responsible for dividing it among your creditors as detailed in the repayment plan.
Not following through on the plan could complicate your bankruptcy case. Missing or stopping payments could lead to the court dismissing your bankruptcy essentially canceling it. In that case you could end up back where you started, or your bankruptcy could be converted into a Chapter 7 bankruptcy that doesnt allow you to keep certain assets.
To avoid that result, its probably a good idea to put your monthly plan payments on autopay or even a payroll deduction to make sure theyre all made on time.
If you make all payments according to the plan, you will be on the road to repaying your debts by the end of the repayment plan, which can help your chances of earning a bankruptcy discharge.
How Much Does It Cost To File For Bankruptcy In Ohio
In Ohio, the cost of filing for bankruptcy varies depending on the attorneys fee, case complexity, the chapter of the bankruptcy case that you select, and where youreside. Bankruptcy court filing fees are currently $335 for a Chapter 7 and $310 for a Chapter 13. These fees go up every few years.;
Every lawyer wants to be compensated for the time they spend on your case. A complex case will take longer, leading to higher attorney fees. For simple chapter 7 cases, costscan range from $1,000 to $1,500 on average. Since Chapter 13 cases are more involved, they usually cost more than a Chapter 7 bankruptcy, and range from $3,000 to $4,000 to start.Additional fees may be necessary if your attorney has to intervene in your case in the years following the filing.
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What Are The Chapter 13 Filing Fees
When filing for Chapter 13, you must pay a;filing fee and administrative fee. As of 2020, the cost to file Chapter 13 is $310.
You can pay the fees in up to four installments as long as the court receives the last installment within 120 days from the date that you filed for bankruptcy. You can ask the court for an extension of up to 60 days if necessary.
Failing to pay the fees may result in the dismissal of your case.
Chapter 7 Vs Chapter 13: Overview Of Key Differences
Known as a liquidation bankruptcy, individuals filing for Chapter 7 must sell their assets that are secured. This could include a house or a car. Only then will the rest of their unsecured debt be discharged, and they wont have to pay it back.
Only individuals who pass a means test are eligible to file for a Chapter 7 bankruptcy.
By contrast, a Chapter 13 bankruptcy is known as a reorganization bankruptcy. Youll create a repayment plan which will allow you to pay your creditors a defined amount over a set period of time rather than selling your property. Once youve paid off the agreed-upon portion of your debt, your other unsecured debts may also be discharged.
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What Is The Cost Of Applying For Chapter 7 Or Chapter 13 Bankruptcy
There is a filing and administrative fee when you file for Chapter 7 or Chapter 13. It costs $335 to file for a Chapter 7 bankruptcy and $310 for a Chapter 13. You can ask the court for permission to pay the fees in four monthly installments. You can also apply to have the fees waived.
If you hire a bankruptcy lawyer, you will also be responsible for paying the lawyers fees. If you do hire a lawyer, the total cost will likely be somewhere between $1,500 and $4,000 depending on whether your file chapter 13 or 7 and the complexity of the case in general.
Chapter 13 Attorneys Fees Need Not Be Paid All At Once
The most common way of paying a lawyers flat fee in Chapter 13 bankruptcy is to make an initial down payment before the bankruptcy petition is filed, with the remainder of the fee included in your monthly payments under your repayment plan.
Example: Brian consults with an attorney and learns that he can solve his financial problems in Chapter 13 bankruptcy by making a $500 payment every month for five years. He agrees to pay the lawyer a total fee of $2,500 and puts down an initial deposit of $1,000. During the case, the bankruptcy trusteethe person in charge of overseeing the casewill pay Brians attorney a certain amount , with the remaining $400 going to Brians creditors. After the $1,500 balance for the lawyers fee is paid off , the trustee will pay the full $500 each month to the creditors.
In some cases, however, the attorney might ask you to pay the full fee upfront.
Because flat-rate attorneys fees are the norm in Chapter 13 bankruptcy, its not surprising that only 4% of our survey respondents agreed to pay their lawyers an hourly rate. If your case involves a business or if you have a high income and will be required to pay a large amount under your repayment plan for unsecured debts , your lawyer might want to charge by the hour.
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Chapter 7 Vs Chapter 13 Bankruptcy In New York
There are two basic chapters of bankruptcy available to individuals in New York. Chapter 7 bankruptcy cases are for individuals and couples who cannot afford to pay their debts. Debtors must meet strict income requirements to qualify for debt forgiveness under Chapter 7. Businesses that file under Chapter 7 must cease operations.
During the Chapter 7 process, a Chapter 7 trustee examines your property to determine if any property may be sold at a bankruptcy auction to repay your debts. Also, Chapter 7 cases generally do not help debtors keep their homes or cars if they are behind on the payments or cannot afford the payments.
On the other hand, debtors who file under Chapter 13 can stop foreclosures and repossessions. Chapter 13 bankruptcy cases reorganize debts into an affordable monthly repayment plan. A debtor can repay mortgage arrearage and car payments over a three to a five-year bankruptcy repayment plan.;
The Chapter 13 process also allows debtors to repay back taxes and past due domestic support payments over time instead of facing wage garnishments and levies. Chapter 13 cases also protect a debtors property from being sold to repay debts.;
Bankruptcy Filing Fees And Other Costs
Bankruptcy court fees depend largely on the kind of bankruptcy.
For both Chapter 7 and Chapter 13 bankruptcy, youll be responsible for paying fees just to have the bankruptcy court hear your case. These can include
- Filing fee The cost to file for Chapter 7 is $335, and $310 for Chapter 13.
- Credit counseling fee If you want to file for bankruptcy, youre required to receive credit counseling first. Many agencies charge a nominal fee for this service, which can cost around $50, according to the Federal Trade Commission. If you cant afford to pay, you may be able to get the fee waived.
- Additional fees You must take a debt education course after you file for bankruptcy in order to get a discharge. The cost can range from $50 to $100, according to the FTC. If you cant afford the fee, you may be able to get the provider to lower its fee or waive it completely.
In General The Process Of Filing For Chapter 13 Bankruptcy Includes:
- 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.
How Much You Repay
The amount you repay to creditors through your plan is determined by comparing
- The equity in your assets not protected by an exemption
- Your disposable income calculated by the means test
- The total of priority, must-pay debts;you have
Rough and dirty, you calculate the number for each of these factors, and your plan must pay the largest of the three tests.; That payment is spread over 3 to 5 years.
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Unsecured Creditors Out Of Luck
The brutal truth is that general unsecured creditors holding medical bills, personal loans, judgments for money, and credit card debt may get nothingin Chapter 13.
Thats because the available money is paid first to priority claims and the costs of administration of the case.; So a debtor with little disposable income may propose a plan that pays only the costs of the plan and the priority creditors.