Court Confirmation Of Chapter 13 Plan
When a debtors Chapter 13 payment plan is complete and approved by the Chapter 13 trustee, the debtor can submit the plan to the court for confirmation. The court will schedule a confirmation hearing before the bankruptcy judge where the debtors payment plan will be reviewed, and if acceptable, be confirmed by the court. If the debtors financial situation significantly changes after plan confirmation, he should contact his bankruptcy attorney to modify the plan payment.
Any decrease in the debtors ability to pay may warrant plan modification. The Chapter 13 trustee may file a Motion to Modify Plan Payments to increase your payments if the debtors annual federal tax return shows a significant increase in the debtors family income.
What Does It Mean To Declare Bankruptcy Anyway
If youre struggling to pay your debts, you may be considering the advantages of filing bankruptcy.
So, what does it mean to declare bankruptcy anyway?
Bankruptcy is a legal proceeding involving an individual or business that is unable to repay outstanding debts. Bankruptcy offers an individual or business a chance to start over by having debts forgiven those debts that just cant be paid.
Bankruptcy helps creditors by giving them some repayment of what is owed them, based on the business assets of the individual or business those assets that can be evaluated and liquidated.
So bankruptcy helps both debtor and creditor.
Lets take a closer look
In this article:
Homestead You May Own It But That Does Not Mean You Control It
The popular belief among individuals is that if they possess a piece of real land, they have the freedom to sell it whenever they want, transfer it to whoever they want, or devise it via their estate planning paperwork in whichever way they see fit. However, when it comes to Florida real estate that fulfills the description of homestead property, this is not necessarily the case if the owner has a spouse and/or young children living with them. The notion of homestead, as well as the ways in which it is taxed, exempted, transferred, designed, and otherwise dealt with, is one of the most complex concepts in Florida legal theory.
- The Florida Constitution defines a homestead as real property consisting of no more than one-half acre of contiguous land in a municipality, held by a natural person, and the improvements on that land.
- Aronson v.
- 3d DCA 2012).
- However, there is considerable case law on exactly what defines a homestead, which is outside the focus of this article.
- For the purposes of this article, a homestead is defined as the dwelling and surrounding property on which an individual or their family resides as their primary residence.
- It is possible that failing to recognize these constraints would result in prolonged litigation over the subject of who will inherit the property after the owners death.
Simply put, what are the limitations on the devise and transfer of a homestead are there? The names of them are as follows:
You May Like: How Many Times Has Trump Filed Bankrupsy
Chapter 13 Bankruptcy Voluntary Reorganization Of Debt For Individuals
Chapter 13 bankruptcy is only available to wage earners, the self-employed and sole proprietors . To qualify for Chapter 13, you must have regular income, have filed all required tax returns for tax periods ending within four years of your bankruptcy filing and meet other requirements set forth in the bankruptcy code.
To take full advantage of the bankruptcy laws and get a fresh start, it is important that you do not continue to incur additional debt. If all or part of the reason you are filing bankruptcy is overdue federal tax debts, you may need to increase your withholding and/or your estimated tax payments. For help determining the proper withholding, visit our online Tax Withholding Estimator. For help with your estimated taxes, visit our Estimated Taxes page.
Find basic information about Chapter 13 bankruptcy below. For more detailed information see the U.S. Courts Bankruptcy Basics Web page.
What Does Bankrupt Mean: Chapter 7
Some of the details regarding goingbankrupt with a Chapter 7 bankruptcy:
Again, a Chapter 7 bankruptcy willlikely include some liquidation of your assets. The money will begiven to your debtors to pay for the debt.
If you have unsecured debt likecredit cards or personal loans from your bank, you may not have topay them back…those debts might be erased.
The state of California will usuallylet you keep necessary assets like clothing, furniture, appliances,and a car. After all, you still need to get back and forth to workso you can get your financial life back on track.
For debts that are secured you might get to choose howthe item is handled in the bankruptcy.
For example, if you’re makingpayments on a car you may choose to…
A Chapter 7 filing usually takesanywhere from 3 months to 6 months to complete.
If you’d like to learn more about howa bankruptcy will affect your personal situation talk to a qualifiedBakersfield bankruptcy lawyer here… 230-7900.
Chapter 7 bankruptcy is not foreveryone…
If you have a decent income or astack of cash in the bank, you may not qualify. You can probablystill qualify for Chapter 13 though.
Or, after talking to us, you may decide that you don’t even need to file at all. there are other options to bankruptcy.
And, for sure, it will keep the collectors from hassling you.
Recommended Reading: How Long After Filing Bankruptcy Can I Buy A Car
Limitations Of Chapter 13 Discharges
Some debts can’t be discharged under Chapter 13 bankruptcy, including:
- Child support and alimony
- Certain fines, penalties, and restitution resulting from criminal activities
- Certain taxes, including fraudulent income taxes, property taxes that became due within the previous three years, and business taxes
- Debts you didnt list on your bankruptcy petition
- Debts incurred due to personal injury or death caused by drunk driving
- Debts arising from fraud or recent luxury purchases
It’s extremely difficultif not impossibleto discharge student loans in either chapter of bankruptcy.
The Automatic Stay In Chapter 13
Filing a Chapter 13 petition automatically “stays” most collection actions against you and your property, including foreclosure proceedings.
During bankruptcy, the automatic stay prevents collections agencies and debt collectors from:
- Starting or continuing lawsuits
- Taking money from your paycheck
- Harassing you
Sometimes this only stops them for a short time, and it doesn’t stop all actions collection agencies can take.
At the start of the filing, you must provide a list of your creditors. Your trustee or the bankruptcy clerk will notify them of the bankruptcy â so make sure you include all of them on the list.
Protecting Co-Debtors With an Automatic Stay
The automatic stay in Chapter 13 also protects co-debtors or “co-signers.” This protection extends to any co-debtors who signed loan or credit card agreements with you.
Read Also: Renting After Bankruptcy
Recovery Rates For Creditors
In bankruptcy, claims are grouped according to similarity . These groupings are based upon various factors, such as identity of the obligor , collateral interests , senior vs. subordinated, post-petition vs. pre-petition, claims entitled to certain priorities , and so forth. Interests are also grouped in the same manner, with preferred stock and common stock having their own classes. Generally, a plan will classify claim holders as secured creditors, unsecured creditors entitled to priority, general unsecured creditors, and equity security holders. A plan of reorganization does not have to provide for the full payment of all prepetition bankruptcy debts . Certain classes of creditors may be deemed impaired , while other classes may be deemed unimpaired .
A plan of reorganization does not have to provide for the full payment of all prepetition bankruptcy debts . Certain classes of creditors may be deemed impaired , while other classes may be deemed unimpaired .
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.
You May Like: How Many Years Until Bankruptcy Comes Off Credit Report
Can A Chapter 13 Discharge Divorce Settlements
Yes! Unlike a Chapter 7 discharge, a Chapter 13 can discharge divorce settlements or divorce awards. The caveat here is that if the divorce settlement is for support or maintenance, the bankruptcy court may treat it like alimony and may find it non-dischargeable. It really depends on the nature of the settlement.
How Do I Know If Chapter 13 Is Right For Me
This is a pretty complicated question, but you can start by looking at some of the basics. The first question you should ask yourself is whether you have a regular income. Chapter 13 is called the wage earner bankruptcy because its success relies on the filerâs regular income. If youâre commission-based, a gig worker, or unemployed, Chapter 13 may not be right for you.
If you do have regular income, take a look at your monthly expenses. Ignore credit card payments, car loans, and other loan repayments. Do you have money left over at the end of the month if you donât have to make all the minimum payments to your creditors? If so, Chapter 13 may be right for you.
How A Chapter 13 Case Ends
After completing your repayment plan, you must show the court that you are current on your child support and alimony obligations and that you have completed the budget counseling course mentioned above. If you meet all requirements, the remaining balance on qualifying dischargeable debt gets wiped out. You should be debt free except for a mortgage or student loan if you have one.
Do I Have To Attend A Court Hearing In A Chapter 7 Vs Chapter 11 Case
Debtors must attend a meeting of creditors in each bankruptcy case regardless of filing under Chapter 7 vs. Chapter 11. However, Chapter 7 cases usually dont have any other court hearings, unless the individual debtor is reaffirming a car loan.
There are numerous court hearings a debtor attends in a Chapter 11 bankruptcy case.
Don’t Miss: Toygaroo Worst Deal
Chapter 13 And The Cares Act
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 COVID-19 pandemic.
For Chapter 13, these include excluding federal emergency relief payments due to COVID-19 from “current monthly income” and “disposable income” and allowing 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.
What States Have Homestead Exemptions
Homestead exemptions are available in almost every state. New Jersey and Pennsylvania do not offer homestead exemptions, although Massachusetts and Rhode Island have imposed a cap on the amount of money that may be claimed as an exemption at $500,000. Some states, on the other hand, have universal homestead laws, which, for example, protect surviving spouses from creditor harassment.
Recommended Reading: Filing Bankruptcy In Wisconsin
Deducting The Homestead Exemption
When a residence is evaluated for value by the local government tax assessors office, a homestead tax or property tax is often levied against the owner of the property in question. The amount of the homestead tax might be a percentage of the value of the property or a fixed sum. Depending on local state legislation, the homestead tax exemption may provide a permanent decrease in property taxes over time. These exemptions can assist surviving spouses in remaining in their houses even after their income has been decreased as a result of the loss of their partners employment.
Using the $50,000 homestead exemption, a house worth $150,000 would be taxed on only $100,000 of its assessed value, while a house worth $75,000 would be taxed on just $25,000 of its assessed value.
In certain regions, the exemption is paid for by a municipal or state sales tax, which is levied in addition to the exemption.
There is no way to claim a homestead exemption for any other property that may exist in another location.
What Are The Different Chapters Of Bankruptcy
When an individual asks what does bankruptcy mean, they are usually not aware there is more than one type of bankruptcy. There are several different types. The ones that individuals and business owners most commonly file are Chapter 7 and Chapter 13. The courts typically consider Chapter 7 as liquidation bankruptcies. Similarly, courts consider Chapter 13 as reorganization bankruptcies.
When you file for Chapter 7, this means that you have assets that can be sold, or liquidated, in order to repay the creditors you owe. A Chapter 13 filing means that you may be able to retain possession of your property, but you must create and submit a repayment plan to the court that will give you the opportunity to pay your debts off within three to five years. If you fail to fulfill your obligations, you could face even more legal issues.
Don’t Miss: How Do I File For Bankruptcy In Virginia
Advantages And Disadvantages Of Bankruptcy
If you’re trying to decide whether you should file for bankruptcy, your credit is probably already damaged. But it’s worth noting that a Chapter 7 filing will stay on your for 10 years, while a Chapter 13 will remain there for seven. Any creditors or lenders you apply to for new debt will see the discharge on your report, which can prevent you from getting any credit.
Black People Struggling With Debts Are Far Less Likely Than Their White Peers To Gain Lasting Relief From Bankruptcy According To A Propublica Analysis Primarily To Blame Is A Style Of Bankruptcy Practiced By Lawyers In The South
Now she was 32, herself the mother of a teenager , and she was entering the same door, taking the same elevator. Like her mother before her, Miller was filing for bankruptcy.
An in-depth discussion of racial patterns in bankruptcy filings and outcomes: Read the analysis.
Read Also: Bankruptcy Petition Preparer Guidelines
The Millionacres Bottom Line
When it comes to protecting your house from bankruptcy or lowering your property tax burden, the homestead exemption is a crucial tool to have at your disposal. National Homeownership Month is an excellent opportunity to learn more about the homestead exemption and other homeownership benefits. Whether youre claiming the exemption to preserve your house from bankruptcy or to cut your property taxes, having a working grasp of the exemption is a valuable asset to have in your arsenal of mental tools and resources.
Why Was Your Chapter 13 Bankruptcy Dismissed And What Does That Mean
As to the limitations on a Chapter 13 bankruptcy, your debt has to be under $394,725 in unsecured loans and less than $1,184,200 in secured loans for chapter 13 help to be permitted.
Loans against houses and cars are the most common examples of secured loans.
Unsecured loans are oftentimes best handled through a Chapter 7. When you want to protect the amount of allowed equity in your home, up to a little over $25,000 per debtor, Chapter 13 can help.
Some debts cannot be discharged in a Chapter 7 case. Debts arising from outstanding alimony, child support, and arrearages owed to the IRS are non-dischargeable. This avoids protection for those who would allow such debts to accumulate intentionally and in bad faith. Under the right circumstances, however, portions or all of these debts may be dischargeable in Chapter 13.
Once you are successful in getting a Chapter 13 discharge, remaining non-secured debts for which you do not have disposable income to pay are forgiven, with the exception of student loans .
Chapter 13 gives the debtor a 3-5 years to make payments, including what may be discounted amounts on installment loans, while some debts may be kept current outside of the Bankruptcy Plan.
In chapter 13, the amount of your payment each month is determined by the types of debts and your disposable income.
Often times a dismissed Chapter 13 case can be revived. Get legal help before taking No for an answer.
Recommended Reading: File Bankruptcy In Ohio
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.