Chapter 13 bankruptcy helps people get a handle on their debt problems while keeping most or all of their personal belongings and other assets. It enables people with regular income to develop a plan to repay all or a portion of their debts over time. The debtor (the person who files for bankruptcy protection) proposes a Chapter 13 repayment plan, which must be approved by the bankruptcy court. Then each month the debtor will make the plan payment to the bankruptcy trustee assigned to administer their case. The trustee will then disperse the funds to debtor’s qualifying creditors.
While Chapter 13 sounds complicated, with the help of an experienced bankruptcy attorney it can be a smooth process. As you explore solutions to your debt problem, it is important to understand the facts about Chapter 13 and Chapter 7 bankruptcy.
Chapter 13 Facts
- Your Chapter 13 bankruptcy repayment plan will last three to five years.
- The plan will last three years if your current monthly income (based on the six months before filing) is less than the state median, adjusted for household size.
- The plan will last five years if your current monthly income is greater than the state median. Under the U.S. Bankruptcy Code, a plan may not last longer than five years. 11 U.S.C. § 1322(d).
- While you are in bankruptcy the law forbids creditors from continuing collection efforts.
- As soon as you file for bankruptcy protection all collection actions against you must stop, including collection calls, lawsuits, wage garnishments, bank levies, and even foreclosure and repossession.
- In general, if a creditor wants to move forward with a foreclosure or repossession during bankruptcy it must petition the court for permission.
- You may catch up mortgage payments and car payments you missed prior to filing for bankruptcy.
- The arrears must be paid back through your Chapter 13 plan.
- During the course of your bankruptcy, you are required to make the monthly payments on your home or car directly to the lender. Only the payment arrears are paid through the plan payments.
- If your home is “underwater” (you owe more on your first mortgage than the fair market value of the home), then you may be eligible to “lien strip” (eliminate) a second mortgage.
- Eligibility for Chapter 13 bankruptcy includes debt limits.
- Your unsecured debts must total less than $394,725, and
- Your secured debts must total less than $1,184.200. 11 U.S.C. 109(e).
- The Chapter 13 debt limits are adjusted periodically, though the above numbers are current through 2018.
- So long as all requirements are met, at the conclusion of your bankruptcy case any remaining dischargeable debt will be erased, including credit cards, medical bills, personal loans, old tax debts that meet certain criteria, and other types of unsecured debts.
Filing for Chapter 13 bankruptcy can be your chance to get your financial life in order. Once you are out from under the burdensome weight of debt, you are empowered to make wise financial decisions for your future.
We Will Help You Through Your Chapter 13 From Start to Finish
It is our mission to ensure that you understand the power and benefits of Chapter 13 bankruptcy. Filing for bankruptcy is a serious financial decision. If you are feeling apprehension about the process, we understand. Know that if you hire us to file your bankruptcy case, we will be by your side from start to finish. We will prepare your bankruptcy petition and Chapter 13 plan, file it with the court, and assist you until the end of your case.
Reach out to us by email at info@BrazielLaw.com or call (912) 351-9000.
We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.