Chapter 13 Bankruptcy

Chapter 13 bankruptcy allows you to restructure your debts and pay them over a three to five-year period in a payment plan that you and the U.S. Trustee agree to, not one the creditors agree to.  This is a key element.  The U.S. Trustee creates a payment plan so you can live comfortably while paying back anywhere from 1%-100% of your debt, depending on your income and expenses.  This payment can be adjusted if you lose income.

In a Chapter 13 bankruptcy case, you are allowed to keep your property, both exempt and non-exempt, and to pay all or some of your debts pursuant to a repayment plan known as the Chapter 13 bankruptcy plan. Upon successfully completing the Chapter 13 bankruptcy plan, the debtor receives a discharge similar to that received by Chapter 7 bankruptcy debtors.  If your circumstances change significantly, you can convert your Chapter 13 plan into a Chapter 7 plan.

Understanding Chapter 13 Bankruptcy

Whereas Chapter 7 bankruptcy might require a filer to expose some property or assets to a bankruptcy sale, Chapter 13 does not. Instead, a debtor attempts to reach a new repayment plan pursuant to which he or she will satisfy the debts owed to creditors. Typically, this repayment plan will be established for the duration of 3-5 years. The following can be helpful in your effort to understand Chapter 13 bankruptcy better:

Chapter 13 Bankruptcy Benefits

If you are at the point where you are considering filing bankruptcy to clear the burden of your unsecured debts, you probably have a lot of unanswered questions about what filing for bankruptcy can do for you, questions about how much of your debt can be eliminated and how you can bounce back financially. One of the biggest questions you might have is “What chapter is right for me?” The bankruptcy chapter you file for can be enormously important.

We know how important your decision to file for bankruptcy is, and we’re happy to work with you to help you arrive at the best decision possible. If a Chapter 13 filing is in your best interest, we may be able to work with you to ease you through the often complex process and get you back on your feet.

The Benefits of Chapter 13

A Chapter 13 bankruptcy filing can help you repay your debts without the liquidation of property that goes along with a Chapter 7 filing. A restructuring debt-reduction option, Chapter 13 allows you to pay off your debts over a set period of time, allowing you to keep your property and valuables that you might lose in another form of divorce. A successful Chapter 13 filing can help you retain much of your property, including:

  • Your house
  • Your car
  • Your rental property
  • Valuable collections
  • Investments

Additionally, it can stop foreclosure proceedings on your home and secure a “super discharge” of debts. If you have the level of income that Chapter 13 bankruptcies require, it may be the best option for paying off your debts. Bankruptcy attorneys may be able to help work with you to draft a workable repayment plan that will satisfy both you and the courts.

Chapter 13 Bankruptcy Eligibility

It can be incredibly frustrating to be living with large amounts of debt, and it is natural to wonder what your options are for getting the debt relief you and your family need. You may wonder if you are eligible to file for Chapter 13 bankruptcy, the debt relief option that allows you to keep most of your property while making regular payments to your creditors.

Any individual who has a regular income and resides is domiciled or has a place of business or property in the U.S. may file a Chapter 13 bankruptcy case. The Bankruptcy Code defines regular income as sufficiently stable and regular income to allow a debtor to make the payments set forth in his Chapter 13 bankruptcy plan. Additionally, Chapter 13 debtors must have liquidated unsecured debts of less than $336,900 and secured debts of less than $1,015,650.

Am I Eligible for Chapter 13?

Unlike a Chapter 7 filing, which requires you to meet several particular criteria, the requirements for Chapter 13 are less hard and fast. Under the current US laws, you can file for Chapter 13 bankruptcy if:

  • You have less than $336,900 in unsecured debts, and
  • You have less than $1,010,650 in secured debts.

Additionally, you need to make enough income to live off of part of it and use the rest to pay down your debts. Our Milwaukee bankruptcy attorneys may be able to work with you to draft a repayment plan that will help you eliminate your debts and get back on your feet financially.

Chapter 13 Bankruptcy Filing Process

Every Chapter 13 bankruptcy debtor must complete a pre-bankruptcy counseling class within the 180-day period before filing. The certificate of completion for the class must be filed with the bankruptcy court, the bankruptcy petition, schedules, and the Chapter 13 bankruptcy plan. Additionally, Chapter 13 bankruptcy debtors must file pay stubs and payment advice for the 60 days immediately before the bankruptcy petition is filed. Chapter 13 bankruptcy debtors must also provide the bankruptcy trustee with a copy of their most recent tax return at least seven days before the Meeting of Creditors.

A Chapter 13 bankruptcy debtor must pay the filing fee of $296. Chapter 13 bankruptcy debtors may request permission to pay the filing fee in installments by filing an Application to Pay the Filing Fee in Installments when the bankruptcy petition is filed. If the application is granted, the debtor must pay the filing in full within 120 days of filing bankruptcy and in no more than four installments.

The Chapter 13 Bankruptcy Plan

The Chapter 13 bankruptcy plan must allocate 100% of the debtor’s monthly net disposable income for payment into the Chapter 13 bankruptcy plan. The plan must specify the frequency with which plan payments will be made, whether they will be paid via income deduction or directly by the debtor, and the plan’s duration. Additionally, the plan must set forth how much will be allocated toward secured, priority unsecured, and general unsecured debts.

A Chapter 13 bankruptcy debtor must begin making plan payments immediately. All payments are due between the date the bankruptcy case is filed and the date of the confirmation hearing must be made for the debtor’s Chapter 13 bankruptcy plan to be confirmed. Additionally, all post-petition mortgage payments and other adequate protection payments must be made to confirm the Chapter 13 bankruptcy plan.

The Meeting of Creditors

The Meeting of Creditors takes place about 30 days after the bankruptcy petition. The debtor’s attendance at the Meeting of Creditors is mandatory. During the Meeting of Creditors, the debtor gives sworn testimony regarding the contents of his bankruptcy petition, including his income, assets, and debts. The bankruptcy trustee conducts the Meeting of Creditors; however, creditors can attend and may question the debtor. After the Meeting of Creditors, the trustee will enumerate any Objections to Confirmation he may have. The debtor has until the Confirmation Hearing to cure any such objections.

The Confirmation Hearing

At the Confirmation Hearing, the bankruptcy trustee will either recommend that the debtor’s Chapter 13 bankruptcy plan be confirmed or that the case be dismissed. If the trustee recommends confirmation, the court will issue an order accordingly. If the trustee recommends dismissal, the court will conduct a hearing and enter a ruling either confirming or dismissing the case.

How a Bankruptcy Attorney Can Help You

Bankruptcy Professionals are committed to helping you resolve your financial issues and get the fresh start you deserve. Our bankruptcy attorneys know that every case is different. Therefore, we work closely with you, considering your special needs, circumstances, and goals. We work closely with you to formulate a Chapter 13 bankruptcy plan that will be confirmed. We know how important the outcome of the bankruptcy is to you. To that end, we remain in close contact with you for the duration of the case so that we are ready to address any issues which may arise that could impact your discharge.