Are you always trying to catch up with your debts and always falling behind? Was your income interrupted by a layoff or a medical emergency? Are you stuck with debts from a time when you were making more money than you are now? Are you facing foreclosure, repossession, or other financial stresses?
We are here to help you get back on your feet with a Chapter 13 bankruptcy. Chapter 13 reorganization may be a viable option if you are currently unable to make necessary payments but feel like you could pay with more time.
Our experienced bankruptcy lawyers will look into your individual financial circumstances to determine whether Chapter 13 bankruptcy is a good option for you.
What is Chapter 13 Bankruptcy?
Under the Chapter 13 bankruptcy reorganization process, you can modify your existing debt payments by reorganizing eligible debt into a new three to five year repayment plan.
Chapter 13 bankruptcy consolidates debt by using a “means test” to gauge how adequately your expected income will be able to cover the severity of your debt. Your bankruptcy lawyer can then devise a payment plan that will afford you flexibility.
What are the Advantages of Chapter 13 Reorganization?
Chapter 13 bankruptcy may be a viable option if you are currently unable to pay off your debt, but feel like you could pay with more time.
Chapter 13 bankruptcy is unique because:
- Income is used to pay some or all money owed to creditors over a predetermined length of time
- Plan for repayment are firm and detailed
- Debts are streamlined into one combined, regularly-scheduled payment
- Payments usually run three to five years
- A person filing for bankruptcy is allowed to keep his or her property
- Agreement is approved by a court
- Bankruptcy under Chapter 13 also applies to tax debt owed to the IRS
By making an affordable monthly payment, Chapter 13 bankruptcy can help you gain the following benefits:
- Protect your equity in your car or home
- Stop the foreclosure process
- Reduce what you owe on some car loans
- Reduce or eliminate, in some cases, what you owe on second or third mortgages
- Pay back an IRS debt without penalties
- Dismiss divorce-related property debt (property settlements) to your ex-husband or wife
For debts that are eligible for discharge in Chapter 7 bankruptcy, such as credit card debts and medical bills, you will typically end up paying only a small percentage in Chapter 13. The rest will be discharged if you successfully complete the payment plan.
What are the Disadvantages of Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is not right for everyone. You need to have a steady source of income that can be used to calculate what sort of monthly payment would be reasonable for you.
The goal is to ensure that you are able to pay your living expenses as well as your bankruptcy payment every month.
Let Us Help
Our experienced bankruptcy lawyers can help you determine whether Chapter 13 is a good plan for you. We are not just here to sign off on the paperwork. Instead, we’ll give you honest, experienced advice on this important decision.
Contact us to speak to one of our experienced bankruptcy lawyers or to arrange a free initial consultation. If you cannot come to our Omaha offices, we can consult with you by telephone.
Learn More About Chapter 13 Bankruptcy
Chapter 13 isn’t the best option for everyone, however, it is a great option for people who want to protect their car or home and who have steady income that can be used to pay debt over a period of time.
In the simplest terms, Chapter 7 removes debt (not all debt) and lets you start fresh, where Chapter 13 reorganizes your debt and gives you time to catch up on missed or late payments. Both Chapter 7 and 13 have their benefits and drawbacks.
As your bankruptcy lawyer, it is my job to discuss both options with you and figure out which route (if any) would be best for your specific situation.
Yes, a chapter 13 bankruptcy can stop a foreclosure sale of your house in most instances. You can learn more about this process in my blog post Filing a Chapter 13 Bankruptcy Will Stop a Foreclosure Sale.
In Chapter 13 bankruptcy, you get to keep your car and pay off your car loan through a repayment plan. And if you owe more than the car is worth, you might be able to reduce the amount owed.
To be eligible to file for Chapter 13 bankruptcy, you must meet the following criteria:
- Live, work, or own property in the United States
- Have a regular source of income
- Have unsecured debts of less than $419,275
- Have secured debts of less than $1,257,850
- Have a profession other than a stockbroker or a commodity broker
- Not dismissed another bankruptcy case within the last 180 days (but there are exceptions)
- Have received bankruptcy-specific credit counseling with the last 180 days
You can be denied if you have attempted to defraud the courts, you’ve concealed information, you’ve lied to the courts, you refuse to comply with court orders, or you fail to take the required personal finance courses.
A chapter 13 plan will generally last 36-60 months or 3-5 years. This may vary based on the amount of debt to be paid through the plan and the income of the debtor.
Chapter 13 is designed to pay debt over a set period of time. In most cases, that won’t decrease if you have more disposable income than you expected. However, the court will allow you to pay off your bankruptcy plan early if you pay creditors 100% of their claimed amounts (some unsecured creditors don’t file claims and you don’t normally have to pay those debts). If you are able to pay all of your outstanding debt, specifically, those creditors that actually filed claims, then you could pay off your plan early.
Yes, in most, but not all, cases. Your bankruptcy attorney can guide you through your specific situation.
You are not required to have a bankruptcy attorney, however, know there are risks associated with going it alone. Bankruptcy law is very confusing and court employees cannot provide guidance or offer legal advice. This is why your bankruptcy lawyer is important. An attorney can educate you on the process, help you determine which type of bankruptcy is best for your unique situation, answer questions about the law or process, help you complete the necessary forms and paperwork, and explain any tax implications (normally a better outcome) that result from the Chapter 13 proceedings versus debt forgiveness outside of bankruptcy.
In most cases, a bankruptcy attorney will help:
- Examine your unique financial situation and determine whether a Chapter 13 is best for you
- Help you obtain the required pre-bankruptcy credit counseling
- Help you prepare a reasonable budget
- Help you communicate with creditors
- Create a Chapter 13 plan
- Prepare and file all the necessary forms and paperwork
- Attend meetings and the court hearing
- Get the Chapter 13 plan approved
- Handle the claims filed in the case and filing objections to improper claims
- Obtain a discharge when ready