Chapter 13 Bankruptcy Attorney

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Do you need to file for bankruptcy, but you have been told that “you make too much money” to qualify for chapter 7 bankruptcy? If so, a chapter 13 bankruptcy can still be very beneficial. While chapter 13 bankruptcy may not allow you to completely eliminate all of your unsecured debt, and while chapter 13 will “force you” into a payment plan of three to five years, most who file end up paying far less than what they owe.  For someone with $100,000 in credit card debt for instance, who is just treading water, and paying thousands per month just to stay current with all the creditors the thought of paying $500 per month, as in $30,000 over the course of five years, is not the worst deal in the world considering that the court will discharge -wipe out- the other $70,000 of debt when it is all said and done.

How about those that do not necessarily have an “income problem,” meaning that they make too much money to qualify for a chapter 7 bankruptcy, but instead have an “asset problem?” How does chapter 13 bankruptcy help them? By asset problem I mean you own an asset -almost always a house- that has a lot of equity, and the asset cannot be fully exempt, and there is a risk that a chapter 7 trustee will take it from you. In this scenario a chapter 13 bankruptcy comes to the rescue. In this situation you can file a chapter 13 bankruptcy, retain your valuable asset, and likely propose a payment plan that pays a fraction of what you owe to your creditors. In chapter 13 bankruptcy you get to retain all of your assets no matter how valuable they are.

Just got out of a brutal divorce? Does the final divorce decree order you to pay a substantial amount of money to your ex-spouse over the next 90 days or otherwise face contempt of court? Chapter 13 bankruptcy can be an invaluable tool in this case. If the divorce judge’s order involves a judgment stemming from an equitable distribution award, which it almost always does, then the debt owed to your former spouse can be discharged in a chapter 13 bankruptcy, the only type of bankruptcy that allows you to do that.

Have a pending foreclosure that needs to be immediately stopped? Chapter 13 bankruptcy can do that. Need a number of years to catch up on your mortgage arrearage? Chapter 13 will allow you to do so. Do you owe a whole bunch of money to the IRS and the interest is killing you? A chapter 13 bankruptcy filing will cease the interest and penalties from accumulating and will allow you to pay the priority debt owed to the IRS in full over five years, while allowing for the older unsecured tax debt to be paid far less and to be lumped in with the credit card debt. Has a car been repossessed? A chapter 13 bankruptcy can help you get your car back and give you time to catch up on what is owed.

Chapter 13 bankruptcy does have its limitations though. One of the prerequisites for your chapter 13 bankruptcy plan getting confirmed is the feasibility test. Simply put, you must prove to the court that you have enough steady income at the time of your bankruptcy filing to continue to make your normal monthly mortgage payments, catch up on your mortgage arrears, and make some partial payments to your unsecured creditors. The bankruptcy court will work with you, but if it is obvious that you do not have the income then your case will be dismissed. Another problem with chapter 13 bankruptcy is that it is a marathon and not a sprint. Meaning, an individual has to accept the fact that a typical chapter 13 bankruptcy filing requires 60 months of payments. That is a serious commitment. If your heart is just not in it, then you likely want to steer clear of this type of bankruptcy filing.

Please note that this is just a broad overview of how a chapter 13 bankruptcy works.

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The eligibility criteria for Chapter 13 bankruptcy include having a regular income and debts that don't exceed a certain amount. Both secured and unsecured debt limits are defined by law and can change over time. Chapter 13 is often beneficial for people who have valuable assets they want to keep, like a home or car, and those who have the financial capacity to repay debts over time but need a structured plan to do it.

The major benefits of filing for Chapter 13 over other debt relief options include the ability to keep your assets while making more manageable monthly payments. Unlike Chapter 7, where your non-exempt assets may be sold to pay creditors, Chapter 13 allows you to retain your property. You're also given the opportunity to catch up on missed mortgage or car loan payments, which could prevent foreclosure or repossession. Chapter 13 often involves lower fees and charges than debt settlement services, making it a more cost-effective solution in the long run.

The Chapter 13 bankruptcy process usually takes between three to five years, depending on your repayment plan. Key stages include the initial filing, the 341 meeting with creditors, court approval of your repayment plan, and finally, the repayment period itself. Regular payments must be made to a bankruptcy trustee during this period, who then distributes the money among your creditors. At the end, any remaining eligible debts might be discharged.

Yes, Chapter 13 can help you stop foreclosure on your home or repossession of your assets. Once you file for bankruptcy, an "automatic stay" is put in place, halting actions from creditors, including foreclosure or repossession. Your repayment plan will include overdue payments on secured debts, allowing you to catch up over time. I will work with you to determine what the best first steps in your bankruptcy case will be so that you can move quickly to protect your assets.

In most cases, you can keep your assets and property when you file for Chapter 13 bankruptcy. The repayment plan is designed based on your ability to pay and the value of your assets. Non-exempt assets, or those not protected by bankruptcy exemptions, generally don't need to be sold off in Chapter 13. Instead, the value of these assets is often factored into the repayment plan, meaning you'd repay an equivalent value to your creditors over the plan's term.

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