Can you Afford to File Chapter 13 Bankruptcy?
The better question is more typically, can you afford not to file Chapter 13 bankruptcy? There is no interest on unsecured debts that are paid in Chapter 13 cases. That means you won’t pay interest on your credit card loans or other signature loans in Chapter 13. Even the best debt management plan will result in you paying more ‘outside’ of bankruptcy because they always charge interest.
Most clients’ Chapter 13 cases are filed with a low up-front cost. Chapter 13 clients pay the bulk of their attorney fees and court fees after their case is filed. Poorer clients can use Chapter 13 to catch up missed payments. Richer clients can reduce their overall payments in Chapter 13. Yes, even wealthy clients can get in over their head financially–Chapter 13 is designed to help people from all walks of life manage their debts the same way a corporation manages and reorganizes obligations in times of financial distress.
LET ME DEFEND YOUR INCOME IN CHAPTER 13:
Filing Chapter 13 is a complete solution to dealing with your debts. Chapter 13 stops garnishments and enables you to cure mortgage and car loan arrears, reduce the interest rate on your car loan, control student loan monthly payments, strip second mortgages, deal with unpaid income taxes, and most importantly pay your credit card debts an amount you can afford. Filing Chapter 13 means that foreclosures, wage garnishments, and repossessions stop immediately. Filing Chapter 13 means that creditors calls must stop immediately.
You may have already tried to manage your debts via debt management plan and found it to be too expensive. Unlike debt management plans that tend to leave certain types of debts out, your creditors cannot deny your ability to include them in your case. Chapter 13 can allow you to significantly reduce the amount of debts you ultimately have to pay off, and also allows you to keep assets you might have to surrender in Chapter 7.
As your Chapter 13 bankruptcy attorney, I will be defending our calculations and deductions on the means test–I’ll be defending your income. I will be protecting your assets using Georgia’s bankruptcy exemptions. I will write the plan that we propose to pay back your creditors. Before we file (or even decide to file) we will discuss how your assets and liabilities will be impacted by the filing. You will always be able to speak to me directly. I will always be with you in court (I do not hire appearance attorneys to meet my clients in court.) Chapter 7 and 13 bankruptcy cases are all I do, and I keep my bankruptcy practice small enough that I know each of my clients’ cases better than they do. The bankruptcy code is perilous–you deserve a bankruptcy attorney who will guide you down the right path. I want you to be able to afford your case because I want you to get the Fresh Start that the bankruptcy code allows.
As my client you will have my cell phone and direct email; that means you will have direct access to me when you have questions about your case. You won’t go through a paralegal or support staff to get me, and I don’t turn my phone off on evenings and weekends–that means, I will be here for you.
WHAT HAPPENS IN CHAPTER 13?
As your Chapter 13 bankruptcy attorney, it will be my job to propose a plan payment that you can afford, and that satisfies your creditors. I’m your ‘Sherpa’, and you’ll need me to get you through safely. Chapter 13 Bankruptcy is also known as Debt Reorganization, or Wage-Earner Bankruptcy–there is always a plan payment. Chapter 7 is also known as liquidation because there is no plan payment. If you are my client, then I’ll be working with you to write a ‘Plan’ that proposes to repay creditors a certain percent of the money owed to all creditors over 3 or 5 years. During the plan, you will make all plan payments to the Trustee assigned to your case. The Trustee will dole out your plan payment to your creditors according to the plan. At the end of the plan, you are discharged, and the debts that you repaid according to the plan terms are erased–you get a fresh start. Some people must file Chapter 13 because of the make too much money to file Chapter 7 according to the means test. Other people choose to file Chapter 13 because filing Chapter 13 bankruptcy allows them to pay off missed mortgage payments, car loan payments , tax problems, child support, and alimony in the Chapter 13 plan. Chapter 13 also allows for the cram down of car note balances, and the stripping of second mortgages.
OTHER CHAPTER 13 BANKRUPTCY FAQs
How Much Will you Pay Each Month if I file Chapter 13 Bankruptcy? The code is designed to get you to pay all of your disposable income into the plan over its life. This is called your Chapter 13 plan payment. One can imagine how a debtor’s definition of disposable income might differ from a trustee’s. I will determine and defend the calculation of how much disposable income you’ll actually have based on what your income and expenses will be during the life of the plan. Chapter 13 allows you to pay most of your fees through the plan. Filing Chapter 13 means that you can start a Chapter 13 case with very little money up front.
Can you be forced to file Chapter 13 even though I’m retired and/or not working? You must have regular source of income to qualify for a Chapter 13, but it is important to note that regular income includes money you get from your spouse’s income, annuities, gains on investments, and certain other types of income. Disposable income can also include unemployment benefits, social security benefits, and retirement income. You and I will discuss your source of income and decide what amount is really disposable.
How Is The Money you Pay into the Plan Allocated To your Creditors? The percent paid is determined by the class of creditors. Some classes are treated less favorably than others. For example, your credit card is typically secured with a signature on the application. Since there is no collateral securing the loan, the debt is unsecured. Your house or your car, however, are both secured by the collateral you gave when you signed the loan documents. These are secured creditors. Secured creditors are generally given the full amount owed (not always). Unsecured creditors are given less–sometimes pennies on the dollar of what you owe. Tax debts, child support arrearages, alimony arrearages and certain other debts are unsecured but classified specially by the code to be paid 100% of what is owed through the plan.
Can you Discharge “ALL” of your Debt? No. You cannot discharge alimony, child support, student loan debt (unless you and I can show undue hardship), tax liability for most years, damages you owe because of certain types of court proceedings (most commonly DUI damages). Your plan will provide for the discharge of other debts upon completion of your plan.
Do you have too much debt to file Chapter 13? The current limit on debt that can be put into a Chapter 13 plan is enough to handle most cases that I see. I will determine if you’re at the limit and if so I’ll explain your other options: Chapter 7 and/or Chapter 11 bankruptcy.
Can we stop a Foreclosure? Yes, with a properly filed Chapter 13 bankruptcy petition, you can slow down (and in some cases) stop foreclosure. This is a very fact specific situation. If you are behind on your mortgage, DO NOT DELAY in calling me to discuss your situation.
Can you get rid of my second mortgage and/or home equity loan by filing Chapter 13 bankruptcy? Yes, you can. This is commonly referred to as stripping your second mortgage. Contact me for details. This is one of my favorite things to do for my clients.
Will you Be Able To Keep My House, My Car, My Boat, My Engagement Ring? What About Other Assets? In general, you will be able to keep all assets in a Chapter 13. You will pay certain secured debts through your plan (your car note), and other secured debts directly to the creditor (your mortgage).
How Long Does It Take To Prepare The Petition? The basic skeleton of a bankruptcy petition can be prepared in a few hours, and I will do this for you if we decide that it is the only way to save your home from foreclosure. In all other cases, it will take a day or so to prepare your petition from the time that I receive all of the documentation I ask you to provide.
What Happens Once you File A Chapter 13? The instant your petition is filed, the automatic stay is in place protecting you from your creditors. Violations of the automatic stay are taken very seriously and met with actual and sometimes punitive damages. As long as the stay is in place:
- Foreclosure proceedings will stop.
- Suits that are pending will be put on hold.
- Calls from creditors will stop.
- Wage garnishment will cease.
- Repossessions will not occur.
One month or so after filing, the Meeting of the Creditors is held, and plan payments begin. Two months or so after filing, the Proposed Plan is confirmed, and the trustee starts paying out money to creditors. 3 or 5 years after filing, the plan is paid off and you will be discharged.