Can Chapter 13 Bankruptcy Help Clear Your Debt?
When you’re deeply in debt climbing your way out seems impossible. You want to pay back what you owe, but mounting financial pressures and the cost of ordinary living make paying off debts seem a far away dream
In these cases Filing for Chapter 13 bankruptcy can be the extra boost you need to start paying back debts and restore your good credit.
Riviere Cresci & Singer LLC takes pride in helping individuals file for Chapter 13 bankruptcy and establish viable repayment plans for debts. As a qualified bankruptcy attorney and Chapter 13 attorney, Riviere Cresci & Singer LLC has helped numerous debtors recover from their debt and return to living financially healthy lives.
We’ll help you with all the particulars and paperwork involved in establishing Chapter 13, including:
- Analyzing your debt
- Determine eligibility and gauge your income
- Establish your property end exemptions
- Complete and file all forms
- Represent you at hearings and help negotiate a payment plan with creditors
Beyond guiding you through the Chapter 13 process, Riviere Cresci & Singer LLC will instruct you as to the best course of action. Chapter 13 isn’t for everyone, and there are numerous factors to consider. No matter your situation, you can always trust Riviere Cresci & Singer LLC to provide honest legal counsel that helps with your debt.
If you are an individual or a sole proprietor, you can file a Chapter 13 bankruptcy to pay off all or part of your debts over three to five years. Rather than wiping out debts immediately, this option allows you to reorganize them so you have time to pay.
Many people who file Chapter 13 bankruptcies have:
- Mortgages or other loans they would like to bring current, so they do not lose their homes or other property
- Taxes, child support or student loans that can’t be wiped out by Chapter 7 bankruptcy
- Moral convictions that debts should be paid no matter how long it takes
- Flexibility; a Chapter 13 can be dismissed or converted to a Chapter 7 at any time by the debtor. You can modify a plan if income changes or you decide to give up a house or a car. You can refinance or sell a house during the plan.
- You can strip a wholly unsecured second mortgage; or the value a car if you’ve had it more than 910 days
- You can challenge the costs and additional charges added to the balance of your mortgage by the lender.
- Trustees want the plan to succeed and will work with you to get it confirmed.
- There are more debts that can be discharged including some divorce payments and damages for malicious and willful acts
Your attorney’s fees can be spread out rather than all due before filing.
- When married a Chapter 13 can be filed for one spouse. This is also true of a Chapter 7 but there are advantages to the 13.
- You can avoid having to reaffirm a car in order to keep it.
- You can solve a tax problem or DSO (domestic support obligation) over the course of the plan, up to 60 months.
- You can stretch out your payments for a car or other secured debt over the course of the plan.
- You will not lose non-exempt property.
- Depending on your income (means test) a trustee can challenge a Chapter 7 filing; the trustee cant challenge a 13.
For a Chapter 13 bankruptcy, you will need a stable income with disposable income (income left over after you pay the bare necessities of life such as shelter, food and utilities). This is why it is often referred to as “wage earners” bankruptcy; you must have wages (income) to keep the plan viable. You must have no more than $1,081,400 in secured debt (debt involving property that your creditor might take if you do not make your payments) and $360,475 in unsecured debt.
The filing of the Chapter 13 petition must be accompanied by a proposed payment plan extending over three to five years. The proposed payment plan must provide for the payment of all “priority claims,” such as taxes, in full.
The bankruptcy trustee appointed by the Bankruptcy Court must review the proposed plan for accuracy and flexibility. The proposed plan is distributed to creditors, who have the right to object to the plan if it is unreasonable. If the plan is approved, you can keep all your assets during the period of the plan. You make monthly payments to the bankruptcy trustee, who distributes the funds to the creditors according to the plan. If the plan is completed as approved, your unpaid debts are “discharged.” If you do not complete the repayment plan as approved, you will have several other alternatives which I can explain to you.
The discharge in a chapter 13 case is somewhat broader than in a chapter 7 case. Debts dischargeable in a chapter 13, but not in chapter 7, include debts for willful and malicious injury to property (as opposed to a person), debts incurred to pay nondischargeable tax obligations, and debts arising from property settlements in divorce or separation proceedings. 11 U.S.C. 1328(a).
If you can’t keep the plan that was formulated, there are still options open.
A debtor in a chapter 13 case has the right to automatically convert the case to chapter 7 at any time. This is done by filing a Request for Conversion form with the Clerk’s Office. Once the case has been converted to chapter 7 the debtor no longer has to continue making chapter 13 plan payments. The debtor can obtain a discharge of his/her dischargeable debt in the chapter 7.
An example of a situation in which someone might do this is if they had filed chapter 13 for a very specific reason, such as to try to catch up on car loan payments or home mortgage payments to prevent loss of the car or foreclosure, but they weren’t able to successfully make the required catch up payments and lost the car or house. In that situation it may not make sense to continue to be in chapter 13 and conversion to chapter 7 may make more sense.
A debtor in a chapter 13 case has the right to voluntarily dismiss his or her case at any time. Individuals who file chapter 13 to try to catch up with payments on a car loan, home mortgage or apartment lease often will seek to dismiss their cases once they have caught up with payments. Some individuals decide they no longer want to be in chapter 13 repayment plan.
By voluntarily dismissing a chapter 13 case the debtor is no longer bound by the chapter 13 plan and no longer required to make monthly plan payments Of course, a debtor who dismisses a chapter 13 before making all payments required under the plan will not receive a discharge.
Another option for a debtor who is unable to make chapter 13 plan payments is to amend the chapter 13 plan to adjust the payment schedule to either reduce the monthly plan payments or extend the length of a plan (not longer than 5 years total from time of 1st payment). In some situations a debtor may need to adjust the monthly play payments to reflect changes in income, such as reduced wages resulting from reduced working hours.
In those situations the debtor can apply to the bankruptcy court to amend the chapter 13 plan to reflect his/her decreased income by reducing the monthly plan payments. Amendment of a chapter 13 plan requires a motion to amend the plan brought on notice to the chapter 13 trustee and all creditors.
- The payment plan (Chapter 13 plan) is typically to be submitted within 15 days of filing the petition.
- Typically the first payment made in the plan, is made 30 days after the plan is submitted (regardless of whether the plan is approved).
- Usually between 20 and 40 days after you file your petition, the trustee will hold the “first meeting of creditors” (also called a “341” meeting ).You must be present for that meeting.
- A confirmation hearing will typically be held 20-45 days after the meeting of the creditors.
- Then, as previously mentioned, the Chapter 13 plan will have a life span of between 3 to 5 years.
Our attorneys will spend time with you to understand how you got yourself into your current situation, what parties are responsible for your current situation and what we can do to provide you the legal relief that you deserve. On-site parking and after-hours appointments available.