Chapter 13 Bankruptcy
Chapter 13 Bankruptcy Introduction
Chapter 13 Bankruptcy can be an excellent remedy for debt relief because it offers so many options that are not available in a Chapter 7. It is so excellent as a remedy that at times even people who qualify for Chapter 7 will choose a Chapter 13. For example, if you are behind in your mortgage and want to keep your home and catch up on the payments, a Chapter 13 allows a full five years for you to catch up. So, in Ohio, specifically Cleveland and Akron areas, you can stop a foreclosure sale.
Instead of having to pay the amount you are behind in one lump sum as demanded by the mortgage companies, you can make gradual repayments. Under the protection of the Bankruptcy Automatic Stay, you can also exercise your rights under other federal law to demand an accounting for all the payments you made, and demand proof of all charges claimed by the mortgage lender.
That is just the beginning. Sometimes it is possible to strip off a second mortgage and judgment liens entirely, converting secured debt to unsecured debt, which may be paid, as the saying goes, for ‘pennies on the dollar’.
A Chapter 13 option can also benefit the borrower with a high-interest-rate “underwater” car. This happens a lot. Sometimes people purchasing a car get the best deal they can, but individuals are at a disadvantage when up against fast-talking finance people at the dealership.
After three years of regular payments, the borrower may have a car worth $7,000.00 on which $15,000.00 is owed at 20% interest. In a Chapter 13 case, that car can be paid off for $7,000.00 at very reduced interest (prime + 2points) over a five-year period. The remaining $8,000.00, that goes to the unsecured pile, “pennies on the dollar.”
Even though Chapter 13 is sometimes called a wage earner plan, that is not the only option. Some people fund with a combination of incomes, with one spouse having social security or other disability benefits, and the other spouse an Uber driver. People have funded their plans with their annual tax refunds, with only minimal payments in the intervening months. While the academic information that follows is true, it is true only in general. What matters is what works for you. The work starts with understanding your facts and your goals. Then we work to tailor your Chapter 13 Plan to accomplish your goals.
As with all pages in this Website, feel free to enjoy the academic articles that follow, but keep in mind that what matters is your facts, your goals, and how the law applies to your facts and goals. That always starts with careful listening to you and a full understanding of your financial facts.
Can A Chapter 13 Bankruptcy Attorney Help Your Financial Situation?
Do you hate answering your phone or checking your mail because of unpaid debts or creditors hounding you for money you don’t have? Have you considered bankruptcy but you keep delaying because you hope things will turn around soon?
A chapter 13 bankruptcy lawyer may be able to help you if you have regular income, allowing you to reorganize your finances and debts, and finally get back on stable financial footing. In order to use this chapter instead of chapter 7 bankruptcy you must have a regular income so that creditors will receive a payment deemed sufficient by the bankruptcy court.
How Does Chapter 13 Bankruptcy Work?
Commonly referred to as a wage earners bankruptcy a chapter 13 case allows a financial reorganization, helping you get your debts and finances under control and offering a fresh start once the process is complete.
Most or all of your unsecured debts, and even secured debts if you are willing to give up the property, can be discharged at the end of the bankruptcy process. Medical bills, credit cards, foreclosure, repossession, and other financial problems can be resolved with the help of an experienced chapter 13 bankruptcy attorney.
The Bankruptcy Trustee and your creditors will work with you to develop a payment plan based on your specific income, debts, and other financial factors. This plan can last from 3-5 years. Once your chapter 13 bankruptcy plan is finished then any unsecured debts that you have left, like credit cards or medical bills, will be discharged and eliminated.
With a chapter 13 filing your bankruptcy attorney can address secured and unsecured debts. You determine whether to keep making payments on your secured debts, like mortgages and vehicle loans, or give up the property and owe nothing if the creditor sells the property for less than what you owe.
What Will My Chapter 13 Bankruptcy Payments Be Every Month?
Your monthly payment plan amount for any chapter 13 case will depend on your income, not the amount of your debts and financial obligations. The bankruptcy trustee will deduct certain expenses that are determined by national and local standards.
Next certain other financial obligations are deducted by the trustee, such as any child or spousal support payments owed, any mortgage and auto loan payments, and any tax debts. These payments will continue to be made by the bankruptcy trustee.
Once all of your expenses and required financial obligations are deducted from your income your disposable income is what is left, and this is what you will have to pay the court each month during your chapter 13 bankruptcy. This amount will be distributed to your creditors by the trustee.
Why Do I Need A Chapter 13 Bankruptcy Attorney?
A chapter 13 bankruptcy is a very difficult and complex process, one that is hard to navigate. There are specific rules, requirements, and regulations that must be followed at each step of the chapter 13 bankruptcy process. Any mistake could be disastrous for your financial situation.
Creditors will fight in order to get bigger payments, and even a small oversight or minor mistake could cost you dearly when your chapter 13 case is dismissed. You could even be prevented from filing again for a specified time.
The right chapter 13 bankruptcy lawyer will fight to make sure you get a fair repayment plan, and they will have the experience needed to get the best possible outcome for you and your fresh financial start. Most of the fees for your chapter 13 bankruptcy attorney are included in the payment plan as well.
Not all bankruptcy attorneys are the same. You need someone with extensive experience navigating the bankruptcy code for you, someone who knows the ins and outs of chapter 13, a bankruptcy lawyer who will get you results and the fresh financial start that you deserve.
Can I Keep My Home And/Or My Vehicle With A Chapter 13 Bankruptcy?
If you choose to keep your home or your vehicle you can do this under an chapter 13 bankruptcy, but you will need to continue making the payments on these debts each month. You can give up the property if you choose, and after it is sold any remaining balance owed will be discharged at the end of your bankruptcy case.
The chapter 13 bankruptcy attorney that you choose in Cleveland or Akron, Ohio can help you determine whether it is best to continue paying on these debts or to surrender the property. The debt is secured by the property, the home or the vehicle involved, so if you keep the property you keep the debt and must make payments through the bankruptcy trustee.
Will Chapter 13 Discharge All of My Debts?
While a chapter 13 bankruptcy will discharge most types of debts, like medical bills and credit cards, and event prevent foreclosures if you choose to keep your home, some debts are not dischargeable even with bankruptcy. These include:
- Wage garnishments
- Bank Levies
- Spousal support
- Child support
- Almost all student loan debt
- Personal injury debt as a result of DUI
All claims against you and your finances have to be made to the bankruptcy court to ensure that all creditors are treated fairly and equally in the process.
The right Cleveland or Akron chapter 13 bankruptcy attorney can help you determine whether this chapter of the bankruptcy code is right for you and your financial situation as a wage earner. Don’t delay if you have debt problems, this will only make things worse. A chapter 13 filing can give you breathing room, much needed debt relief, and an opportunity for reorganization so you have a brighter financial future.
M. Erik Clark “Chapter 13 Bankruptcy”. Borowitzclark.com https://www.borowitzclark.com/practice-areas/chapter-13-bankruptcy/ . Accessed 7/17/2020.
Carla Fried “Bankruptcy: Chapter 7 vs Chapter 13.” Experien.com https://www.experian.com/blogs/ask-experian/bankruptcy-chapter-7-vs-chapter-13/ . Accessed 7/17/2020.