Who Should File Chapter 13 Bankruptcy?

In my practice, there are generally two reasons why debtors file for Chapter 13 bankruptcy. The first one is that the debtor(s) earn too much money to file a Chapter 7 bankruptcy. There are many factors that need to be determined to gauge whether or not a debtor’s income is too high to qualify for a Chapter 7. Some of these factors include the number of people who reside in the household as well as any court ordered payments and the amount of qualified monthly deductions.

The second most common reason that debtors file for Chapter 13 bankruptcy is that they own a house that they have fallen behind on their payments and are facing a potential foreclosure. These debtors want to retain their homestead but do not have the full amount to become current. Therefore, they file a Chapter 13 plan which proposes to pay the arrearage in full during the course of the plan (as well as the treatment of other secured, priority, and unsecured creditors).

There are other additional advantages to filing a Chapter 13 that involve unpaid tax liabilities as well as lowering high interest rates on secured loans. In addition, if you have owned a vehicle for a particular period of months, sometimes you are able to “cram down” the amount you are repaying on the loan to the actual value of the vehicle.

How The Process Works

In a Chapter 13 bankruptcy, the debtor proposes a full or partial repayment plan which is administered by the bankruptcy court. The debtor makes monthly payments in accordance with the plan to the trustee’s office, and the trustee makes payments to the creditors. The repayment period may be from three to five years, depending on the debtor’s disposable income.

• Once a Chapter 13 bankruptcy is filed, there will be a mandatory court hearing scheduled approximately four to six weeks later.
• At this proceeding, the trustee will ask the debtor a series of questions and go over the terms of the proposed plan.
• The proceeding usually only takes a few minutes and the debtor’s attorney will also be present.

A Chapter 13 bankruptcy can be complex, and every case is different. It is very important that the debtor retain a trusted and reputable attorney who will maintain continuous contact with the debtor throughout the course of the plan. If you do not have a steady income or job, filing for Chapter 7 bankruptcy may be the better option.

Get The Knowledgeable Guidance You Need

It can be frustrating to see all of your hard-earned money fly out the door each month to pay off increasing debt. Chapter 13 bankruptcy was created to help people like you who have a decent job but are buried under mounting interest and credit card, medical or mortgage bills.

To find out how to get started or just get some questions answered, call 712-847-5882. I can also be reached via website inquiry email. Send me a line or two about what you are dealing with and I will get in touch about your options. As firm principal and an attorney focused on bankruptcy, I offer personal, attentive and accessible service to each and every client I serve.

I am a debt relief agency. I help people file for bankruptcy relief under the Bankruptcy Code.