Is most often used to catch-up on arrearages owed on homes or vehicles or when the household income of the petitioners is too high to pass the Chapter 7 Means Test. When you file Chapter 13 bankruptcy, you agree on a plan to catch up on delinquent payments and repay your creditors over time. An experienced bankruptcy lawyer can help you determine if filing Chapter 13 bankruptcy is the right choice for you.
Many people choose not to file Chapter 13 bankruptcy because it requires repayment of at least some debt. The Hedtke Law Firm can explain the advantages and drawbacks of Chapter 13. Filing Chapter 13 may be a good choice for you if:
You have non-exempt property that you wish to keep. Filing Chapter 13 bankruptcy allows you to keep your personal property-even your non-exempt possessions.
Your home is in danger of foreclosure. Under Chapter 13, you can stop foreclosure or repossession proceedings as you catch up with late payments over time.
You have substantial unsecured debt. In a Chapter 13 bankruptcy, you’ll pay off tax obligations, student loans, and other debts that can’t be discharged when filing Chapter 7.
You wish to protect a friend or relative who is your co-debtor. As long as you follow the Chapter 13 payment plan established by the court, your creditors will not seek payment from the co-signer on your credit card or loan.
Chapter 13 bankruptcy is available to individuals only. If you are a business owner who wishes to file Chapter 13, you must file as an individual, but you may include any business-related debts for which you are personally responsible. The Hedtke Law Firm can determine your eligibility to file Chapter 13 bankruptcy, but in general:
You must have sufficient disposable income. To file Chapter 13, you must provide proof of enough steady income (after certain allowed expenses) to repay your creditors. Wages, commissions, unemployment benefits and payments from a pension plan are just some of the sources you can use to fund your repayment plan. If you’re married, your working spouse’s income also qualifies as a source of income.
Like Chapter 7, Chapter 13 bankruptcy requires proof that you’ve received credit counseling from an approved agency within 180 days prior to filing bankruptcy. Additionally, you cannot file under Chapter 13 if you’ve had a bankruptcy case dismissed or failed to comply with bankruptcy court orders within the past 180 days.
You must be current on filing your tax returns. In order to declare Chapter 13 bankruptcy, you must be able to prove that you’ve filed your federal and state income tax returns for the past four years.
Your debts can’t exceed certain limits. You cannot file Chapter 13 bankruptcy if your unsecured debts are greater than $360,475 or if your secured debts are more than $1,081,400.
Below is an overview of the process of filing Chapter 13 bankruptcy.
The Hedtke Law Firm will begin by helping you prepare a voluntary bankruptcy petition and detailed schedules of your assets, liabilities, income and expenses. You’ll be required to provide proof of income, copies of your tax returns for the last four years, and confirmation that you’ve participated in the mandatory credit counseling. In addition, you must develop a reasonable payment plan that outlines how you will pay off your debts. This plan must be filed with the court and is subject to court approval.
After your bankruptcy lawyer assists you in electronically filing your bankruptcy petition, an automatic stay will take effect. This temporary order will protect you from harassment by creditors and your home and other property from foreclosure or repossession.
After the meeting of creditors, your proposed repayment plan will be reviewed at a confirmation hearing. When your plan is approved, you’ll begin to make the scheduled payments to the trustee; these payment amounts may or may not be the same as those you originally proposed. The trustee will, in turn, pay your creditors, some of whom will receive 100% of what you owe, while others receive a greatly reduced amount. High-priority debts-such as child support and tax obligations-are usually paid in full.
Within 30 days of filing bankruptcy under Chapter 13, you must begin to make monthly payments to the court-appointed trustee based on the terms of your proposed payment plan-even if the plan has not yet been confirmed by the court.
All of your property. You pay your debts out of future income.
You will be allowed to keep it.
Three to five years. During this time, you will be paying people you owe a portion of what you owe them.
Stays on your credit report for 7 years.