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Understanding Chapter 13 Bankruptcy in Virginia and How to File

Bankruptcy is a legal procedure that provides relief to individuals or businesses who are unable to pay their debts. It allows them to reorganize their financial obligations and make a fresh start. Of the different types of bankruptcy, Chapter 13 is a unique one designed to benefit individuals with a regular income by allowing them to repay their debts over time. Here’s everything you should know about filing for Chapter 13 bankruptcy in Virginia.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy, also known as a wage earner’s plan, is a form of bankruptcy that allows individuals with regular income to create a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years.

Unlike Chapter 7 bankruptcy, which involves liquidation of assets, Chapter 13 bankruptcy permits individuals to keep their property and repay creditors out of their future income. This aspect makes it a preferred choice for individuals who have valuable non-exempt property or significant equity in their home, which they want to keep.

Another significant feature of Chapter 13 bankruptcy is the ability to modify some creditor rights, such as reducing the amounts paid on certain debts or altering the terms of a home mortgage.

Reasons to File for Chapter 13 Bankruptcy

There are several reasons why individuals choose to file for Chapter 13 bankruptcy:

  • Avoid foreclosure
  • Consolidate debts
  • Protection of non-exempt property
  • Discharge certain debts that can’t be discharged in Chapter 7

Defining Your Eligibility for Chapter 13 Bankruptcy

Not everyone is eligible to file for Chapter 13 bankruptcy. There are specific criteria that need to be met:

Regular income: Individuals need to show that they have a regular income and are capable of meeting the payment obligations under a Chapter 13 plan.

Debt limits: There are debt limits for filing a Chapter 13 bankruptcy, which you must meet to be eligible.

Previous bankruptcy filings: Individuals cannot file for Chapter 13 bankruptcy if they have had a bankruptcy petition dismissed during the 180 days prior due to their failure to appear in court or comply with court orders. 

Credit Counseling: Before filing for Chapter 13 bankruptcy, individuals must receive credit counseling from an approved credit counseling agency.

Chapter 13 Bankruptcy Process

Credit Counseling

Before you can file for Chapter 13 bankruptcy, you are required to complete a credit counseling course from an approved agency. This requirement aims to ensure that you are fully aware of alternatives to bankruptcy and that bankruptcy is the right choice for your financial situation.

Filing the Petition

Once you have completed credit counseling, the next step is to file a petition with the bankruptcy court serving your area. This petition initiates the bankruptcy process. Along with the petition, you must also file several other documents, including 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.

Submitting a Repayment Plan

In addition to the documents mentioned above, you must also submit a proposed repayment plan. This plan should outline how you intend to pay off your debts over the next three to five years. The length of your repayment plan depends on your income relative to your state’s median income. If your income is below the median, you will have a three-year plan unless you request and justify a longer period. If your income is above the median, you will have a five-year plan.

Confirmation Hearing

After submitting your repayment plan, the bankruptcy court will hold a confirmation hearing. At this hearing, the court will decide whether your plan is feasible and meets the standards for confirmation set forth in the Bankruptcy Code. Creditors may also attend this hearing and object to the confirmation of your plan.

Making Plan Payments

If the court confirms your plan, you will begin making payments to a bankruptcy trustee. The trustee will distribute these payments to your creditors according to the terms of your plan.

Discharge

Once you have completed your repayment plan, the court will discharge the remaining balance of qualifying debts. This discharge releases you from the obligation to pay these debts and prevents creditors from taking any collection actions on these debts.

Determining Whether You Can Afford Your Chapter 13 Repayment Plan

When you file for Chapter 13 bankruptcy, you will need to submit a repayment plan to the court. This plan will outline how you intend to repay your debts over the next three to five years. Determining whether you can afford your proposed repayment plan is a crucial step in the bankruptcy process.

To determine whether you can afford your repayment plan, you will need to assess your income, expenses, and debts. Your income should be regular and sufficient to cover your necessary living expenses, such as food, housing, utilities, and transportation, as well as your proposed plan payments.

What to Do if You Can’t Pay Your Chapter 13 Repayment Plan

If you are struggling to make your Chapter 13 plan payments, it’s crucial to take action as soon as possible. Here are some options you may consider:

  • Modify Your Plan
  • Convert to Chapter 7
  • Dismiss Your Case
Benefits of Speaking with a Bankruptcy Lawyer

Navigating the bankruptcy process can be complicated and overwhelming. Speaking with a bankruptcy lawyer can provide numerous benefits:

Professional Advice

A bankruptcy lawyer can provide you with professional advice on whether bankruptcy is the best option for you, which type of bankruptcy to file, and how to navigate the bankruptcy process.

Understanding of Bankruptcy Laws: Bankruptcy laws are complex and vary by state. A bankruptcy lawyer has the knowledge and experience to understand these laws and can ensure that you are following all legal requirements.

Assistance with Paperwork

Filing for bankruptcy involves a significant amount of paperwork. A bankruptcy lawyer can help you accurately and completely fill out all necessary documents.

Representation in Court

If you need to attend a court hearing during your bankruptcy case, a bankruptcy lawyer can represent you and advocate on your behalf.

Contact The Law Offices of Robert S. Brandt to Get an Initial Consultation on Chapter 13 Bankruptcy in Virginia

If you’re considering bankruptcy, the Law Offices of Robert S. Brandt can provide the expert advice and guidance you need. Our team has extensive experience in helping individuals navigate the bankruptcy process and can help you understand your options and make informed decisions about your financial future.

To get started, contact us to schedule an initial consultation. 


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Chapter 13 Bankruptcy vs. Debt Consolidation: Understanding the Differences

When it comes to managing overwhelming debts, individuals have a variety of options. Two popular choices are Chapter 13 bankruptcy and debt consolidation programs. Both can help individuals to repay their debts, but there are differences between them. Here we compare Chapter 13 bankruptcy and debt consolidation programs, highlighting the unique features of each option from a Chapter 13 bankruptcy attorney.

Proposed Chapter 13 Plan

A key feature of Chapter 13 bankruptcy is the plan itself. This plan outlines how the individual will repay their debts over a period of three to five years. The court must approve this plan, but it provides a clear roadmap for the individual to follow, and this cannot be changed by creditors once in place.

In contrast, debt consolidation programs do not typically involve a proposed plan. While the program may negotiate with creditors to reduce interest rates and waive fees, the individual is still responsible for making payments on time. There may be some flexibility in the payment schedule, but it is ultimately up to the individual to manage their debts.

Revoking Discharged Debt

In some cases, a debt discharge may be revoked even after the bankruptcy process is complete. This can happen if the individual committed fraud during the bankruptcy process failed to disclose all assets and debts, or otherwise violated the terms of the bankruptcy agreement.

If a debt discharge is revoked, the individual is once again responsible for repaying the discharged debts. It is important to understand the terms of the bankruptcy agreement and to comply with all requirements to avoid the possibility of a discharge revocation.

Automatic Stays From Collection

One of the most significant benefits of Chapter 13 bankruptcy is the automatic stay. This is a court order that immediately stops most creditors from attempting to collect debts. It can provide much-needed relief to individuals who are facing harassment from creditors.

Debt consolidation programs do not typically involve an automatic stay. While the program may negotiate with creditors to reduce interest rates and waive fees, the individual is still responsible for making payments on time. There may be some protection offered by state and federal laws, but it is not as comprehensive as the automatic stay provided by Chapter 13 bankruptcy.

Less to Pay Back

Debt consolidation programs aim to consolidate multiple debts into a single, more manageable payment. The program negotiates with creditors to reduce interest rates and waive late fees, allowing the individual to pay back less money over time. While this can provide relief, it is important to note that the individual is still responsible for repaying the full amount owed.

On the other hand, Chapter 13 bankruptcy allows individuals to discharge certain debts entirely. This means that they may only have to pay back a portion of what they owe, based on their income and expenses. This can result in significant savings, allowing the individual to get back on their feet more quickly.

More Flexibility to Build a Plan

Chapter 13 bankruptcy provides individuals with significant flexibility to build a plan that works for them. They can propose a plan that prioritizes certain debts, such as mortgage payments or car loans while reducing payments on others. This can allow individuals to maintain ownership of assets that might otherwise be lost in bankruptcy.

In contrast, debt consolidation programs do not typically provide as much flexibility. While the program may negotiate with creditors to reduce interest rates and waive fees, the individual is still responsible for making payments on time. There may be some ability to prioritize certain debts, but it is not as comprehensive as the flexibility provided by Chapter 13 bankruptcy.

The Allowed Dischargeable Debts

In Chapter 13 bankruptcy, certain debts are considered “dischargeable.” This means that the individual is not responsible for repaying them once the bankruptcy process is complete. Some common dischargeable debts include credit card debts, medical bills, personal loans, and utility bills.

However, it is important to note that not all debts are dischargeable in Chapter 13 bankruptcy. For example, certain taxes, student loans, and child support payments cannot be discharged. It is important to consult with a qualified bankruptcy attorney to understand which debts can be discharged and which cannot.

Debt Reaffirmation

In Chapter 13 bankruptcy, individuals may have the option to “reaffirm” certain debts. This means that they agree to continue making payments on the debt, even though it would otherwise be discharged in the bankruptcy process. This can be beneficial if the individual wants to maintain ownership of a particular asset, such as a car or home.

However, there are some issues to consider when reaffirming debts. If the individual falls behind on payments, they may be at risk of losing the asset in question. Additionally, reaffirmed debts are not dischargeable in the future, so the individual will remain responsible for repaying the debt even if their financial situation changes.

It is important to carefully consider the decision to reaffirm a debt and to consult with a qualified bankruptcy attorney before making this choice.

Contact the Law Offices of Robert S. Brandt to Request a Consultation with the Best Bankruptcy Attorney

If you are considering Chapter 13 bankruptcy or debt consolidation as a debt relief option, it is important to consult with a qualified Chapter 13 bankruptcy attorney who can guide you through the process and help you make informed decisions. At The Law Offices of Robert S. Brandt, we have the experience and expertise necessary to provide you with the guidance you need.

Don’t wait to get the help you need. Contact the Law Offices of Robert S. Brandt today to schedule a consultation with the best bankruptcy attorney. We are here to help you navigate the bankruptcy process and achieve financial stability.


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Disposable Income and Filing Chapter 13 Bankruptcy Laws

When filing for Chapter 13 bankruptcy, disposable income must be 100% committed to your Chapter 13 repayment plan. This means that any income that is not dedicated to your Chapter 13 repayment plan or living essentials is considered disposable income and can be used to pay your debts.

Here’s what you need to know about disposable income when filing Chapter 13.

Calculating Your Current Monthly Income

When filing Chapter 13, your monthly income is the average monthly income for the previous six months before filing. You should take into consideration all forms of income regardless of whether you are an employee or self-employed.

Disposable Income

Disposable income is all income that is not dedicated to your Chapter 13 repayment plan or living essentials. This includes any income you may have earned while in bankruptcy, whether it be wages, social security, pensions, or alimony.

Finding Your State’s Median Income

To find your state’s median income, go to the website of the US Census Bureau. On the website, enter your zip code and the site will give you your state’s median income. Whether you are above or below the median will determine:

  • How to calculate your disposable income.
  • What your repayment plan will be.
  • Which income and expenses are counted in your financial situation.

Calculating Disposable Income If Your Income is Less Than the State Median Income

If your disposable income is less than the state median income, you will need to use a combination of your monthly income minus expenses necessary to support your family, debts, installment payments, debts secured by liens, and other secured debt arrearages. Once you subtract those amounts, you have to pay the rest to your Chapter 13 repayment plan.

Calculating Disposable Income If Your Income is More Than the State Median Income

If your disposable income is more than the state median income, you will need to use expense amounts that the IRS sets, and these could be different from your actual expenses. When your income is more than the state median, you also subtract mandatory payroll deductions, child support and alimony payments, income taxes, Social Security taxes, Medicare taxes, self-employment taxes, out-of-pocket healthcare expenses, and payments to priority claims.

Filing Chapter 13 With the Law Office of Robert S. Brandt for Assistance If you are struggling to make your monthly payments on your debts, filing for Chapter 13 may be the best option for you. A bankruptcy lawyer can help you calculate your disposable income and figure out the best way to use it to pay your debts. Get help filing Chapter 13 from the Law Office of Robert S. Brandt and request a consultation today.