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Chapter 13 Bankruptcy

The Law Office of Paul L. Brisson can help you and advise you if utilizing Chapter 13 is right for you. He will walk you through every step of the Chapter 13 Bankruptcy process. Call Now for a FREE Consultation!

What is Chapter 13?

Chapter 13 is known as a debt adjustment. It allows individuals to temporarily STOP foreclosures and collections. Chapter 13 is filed by individuals who want to pay off their debts over a period of three to five years. This type of bankruptcy only appeals to people who have non-exempt property that they want to keep, and It enables individuals with regular income to develop a plan to repay all or part of their debts. It differentiates between three types of debts: priority debts, secured debts and unsecured debts. It lets you reschedule and extend secured debts over the life of your Chapter 13 plan. Debt limits apply and it will stay on your credit score for seven years.

What are the advantages of filing for Chapter 13?

Chapter 13 offers individuals a number of advantages over liquidation under chapter 7. Chapter 13 offers individuals an opportunity to save their homes from foreclosure. By filing under chapter 13 you can stop foreclosure proceedings and help delinquent mortgage payments over time. You must still make all of your mortgage payments that come due during the chapter 13 plan on time, but at ease. Another advantage of chapter 13 is that it allows individuals to reschedule secured debts other than a mortgage for their primary residence. Doing this may lower the payments. Chapter 13 also has a special provision that protects third parties who are liable with the debtor on “consumer debts.” This provision may protect co-signers. Chapter 13 acts like a consolidation loan under which the individual makes the plan payments to a chapter 13 trustee who then distributes payments to creditors. Individuals will have no direct contact with creditors while under chapter 13 protection and all harassment telephone calls will come to a halt.

Chapter 13 Eligibility

Any individual, even if self-employed or operating an unincorporated business, is eligible for chapter 13 relief as long as the individual’s unsecured debts are less than $360,475 and secured debts are less than $1,081,400. These amounts are adjusted periodically to reflect changes in the consumer price index. A corporation or partnership may not be a chapter 13 debtor.
An individual cannot file under chapter 13 or any other chapter if, during the preceding 180 days, a prior bankruptcy petition was dismissed due to the debtor’s willful failure to appear before the court or comply with orders of the court or was voluntarily dismissed after creditors sought relief from the bankruptcy court to recover property upon which they hold liens. In addition, no individual may be a debtor under chapter 13 or any chapter of the Bankruptcy Code unless he or she has, within 180 days before filing, received credit counseling from an approved credit counseling agency either in an individual or group briefing. There are exceptions in emergency situations or where the U.S. trustee or bankruptcy administrator has determined that there are insufficient approved agencies to provide the required counseling. If a debt management plan is developed during required credit counseling, it must be filed with the court.

Stop Foreclosure on your home, file for Chapter 13 Now!

Foreclosure is a legal process whereby a creditor collects property owned by the Debtor in which the payments have fallen behind. Many Debtors are not aware that they have certain statutory rights when facing foreclosure. If the debtor does not satisfy the balance owed, then the property will be liquidated sold by the creditor to satisfy their lien. Any remaining balance after the liquidation sale is called a deficiency balance. Debtors are still obligated to pay the deficiency balance even after they lose the property.

How can filing Chapter 13 Bankruptcy Stop Repossession of my home?

Chapter 13 bankruptcy provides for an automatic stay. Upon notification of filing chapter 13 Bankruptcy, the creditor is required to stop harassment collection calls and comply with the debtor’s repayment plan. For example, a debtor who was two months delinquent on a car note and the payments are approx $400.00 per month, could file for Chapter 13 Bankruptcy and pay back the $800.00 delinquency over a three to five year payment plan. The debtor could also repay their entire car note through the Chapter 13 if they choose. If the debtor meets the other requirements to make the Chapter 13 Bankruptcy plan successful this can be the difference between a debtor keeping their property or losing it.

What is an Automatic Stay?

In bankruptcy law, an automatic stay is an automatic injunction that halts actions by creditors, with certain exceptions, to collect debts from a debtor who has declared bankruptcy. Under section 362 of the United States Bankruptcy Code, the stay begins at the moment the bankruptcy petition is filed. Secured creditors may, however, petition the bankruptcy court for relief from the automatic stay upon a showing of cause.

Chapter 13 Commonly Used Terms in Bankruptcy Court

Chapter 13 – The chapter of the Bankruptcy Code providing for adjustment of debts of an individual with regular income, often referred to as a “wage-earner” plan. Chapter 13 allows a debtor to keep property and use his or her disposable income to pay debts over time, usually three to five years.

Chapter 13 trustee – A person appointed to administer a Chapter 13 case. A Chapter 13 trustee’s responsibilities are similar to those of a Chapter 7 trustee; however, a Chapter 13 trustee has the additional responsibilities of overseeing the debtor’s plan, receiving payments from debtors, and disbursing plan payments to creditors.

Trustee – The representative of the bankruptcy estate who exercises statutory powers, principally for the benefit of the unsecured creditors, under the general supervision of the court and the direct supervision of the U.S. trustee or bankruptcy administrator. The trustee is a private individual or corporation appointed in all chapter 7, chapter 12, and chapter 13 cases and some chapter 11 cases. The trustee’s responsibilities include reviewing the debtor’s petition and schedules and bringing actions against creditors or the debtor to recover property of the bankruptcy estate. In chapter 7, the trustee liquidates property of the estate, and makes distributions to creditors. Trustees in chapter 12 and 13 have similar duties to a chapter 7 trustee and the additional responsibilities of overseeing the debtor’s plan, receiving payments from debtors, and disbursing plan payments to creditors.