Chapter 13 bankruptcy is often referred to as “reorganization” because it is designed for debtors who wish to keep certain assets, such as a home, through committing to a payment plan that systematically repays creditors. With Chapter 13, overdue debts for non-exempt items are repaid over a three to five year period. To qualify, claimants must prove to have a steady source of income.
To enter Chapter 13 Bankruptcy the court must consent to the plan at the confirmation hearing after they verify the plan adheres to the requirements outlined in the bankruptcy Code. Once approved, debtors hand over a portion of their earnings as agreed upon in their plan. The bankruptcy trustee then allocates the funds to the appropriate creditors. Non-exempt property is also factored into the equation when drafting a repayment Plan.
Payment amounts made to the trustee are determined in the plan, which a Chino Chapter 13 bankruptcy attorney will assist with. The payment amount is determined based on factors such as monthly living expenses, income, and debt. If you are curious about whether you may retain all possessions and property, you may do so. That is, as long as your Chapter 13 plan meets all of the requirements for being approved (or “confirmed”) by the court For this plan to be approved, claimants must agree to pay back an amount that is, at the very least, equivalent to what the creditors would have received had the claimants property been “liquidated.”
Chapter 13 bankruptcy plans last anywhere between 36 and 60 months, during which the majority of creditors are banned from contacting you. Once a claimant has filed for bankruptcy protection in Chino, the court will notify creditors listed within the schedules via mail. Once letters are received, which takes about a week or two, debt collection efforts are to be stopped and all debtors will be relieved of any harassment from creditors.
With all the logistics required to carry out a successful bankruptcy, it is important to hire a highly skilled and experienced lawyer to handle your case. At Hedtke Law Group, we have over thirty years of experience helping honest, hard-working people successfully get out of debt. Contact us today for a free consultation and information on how Chapter 13 bankruptcy can help you obtain that fresh start required to reestablish your financial reputation.
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.
To schedule a free consultation, please call Hedtke Law Firm today at our Upland office at: 909 579-2233 or Chino office: 909 457 0183 or Moreno Valley office at: 951 746 1722.