Chapter 13 bankruptcies are the second most common type of bankruptcy. These bankruptcies focus on debt consolidation, where you pay a fixed monthly amount. Unlike with Chapter 7 bankruptcies, only individuals can file for Chapter 13 bankruptcy.
At Riverwest Law Firm, we represent individuals who are seeking to file bankruptcy in Shorewood or the surrounding communities. We work hard to ensure that our clients understand the legal process related to a Chapter 13 bankruptcy. If you are considering filing for bankruptcy, contact our office at (414) 369-2390 to schedule a free, no-obligation consultation.
Who Should File Chapter 13 Bankruptcy?
The cases are best for people with regular incomes, secured debts, and priority debts. Examples of priority debts include mortgages, car notes, tax debt, and unemployment overpayment.
Key features of a Chapter 13 bankruptcy:
- Only individuals can file
- Can spread payments over 3 to 5 years
- Allows for removing liens off houses
- Payments are tailored to the amount of your income and property
- Only one monthly payment for a wide number of debts
Additionally, clients may be able to use Chapter 13 bankruptcies to pay off tax debt, remove second mortgages from their houses, and catch up on car loans. Despite how common they are, bankruptcy proceedings can be complicated and should be handled by an attorney.
How Many Chapter 13 Bankruptcies Are Filed Each Year?
Data from the United States Courts indicates that over 100,000 people filed for bankruptcy in a single year. While less than the over 288,000 that filed for Chapter 7, it is still a substantial amount. Chapter 13 bankruptcies are the second most common form of bankruptcy filing in the United States.
Steps for Filing Chapter 13 Bankruptcy
When filing under Chapter 13, there is pre- and post-filing preparation that must be done. As with Chapter 7, the petition and schedules must be prepared first. In these documents, all of the assets, income, and expenditures, as well as the debts of the debtor, are disclosed.
In addition to those documents, a Chapter 13 plan must be prepared. This plan is a proposal payment plan that addresses the various creditors listed by the bankruptcy. The plan sets out how creditors are to be paid, in which order, and in what amounts. The debtor sets the monthly payment at this time and how that payment is to be set. This is an initial proposal that can change depending on what happens after filing.
How Is a Monthly Payment Established?
Certain petition documents set a minimum monthly payment that is based on the debtor’s income, less certain types of expenses. This document must be prepared very carefully, as accuracy is a must to prevent people from being forced into paying too much per month.
The income and expense schedules must also demonstrate that the debtor has the ability to make the suggested payments. Individuals must take a credit counseling class prior to filing.
What Requirements Does a Debtor Have?
Filing Chapter 13 bankruptcy triggers a wide variety of requirements on the debtor. Within 30 days, the debtor must begin making payments according to the proposed plan. Once the Chapter 13 is filed, creditors start making claims in order to receive payments. These claims list the creditors' understanding of the debts and how they are categorized.
It is common for these to vary from the debtor’s information, and sometimes this necessitates alterations to the plan. These types of adjustments are usually negotiated between the creditors and your attorney.
What Is a Meeting of Creditors?
A Meeting of Creditors is also required, which usually is between the debtor and the trustee. At this meeting, the trustee reviews the petition and schedules for accuracy, seeks any updated information or adjustments, and also provides general information on payments.
Sometime after this meeting, the plan is set for confirmation, at which point the judge may approve of the plan, and payments are dispersed to the creditors on a monthly basis. After taking a financial management course and completing of the plan, the debtor can receive a discharge that removes various types of outstanding debts according to the plan and law.
Considering Filing for Chapter 13 Bankruptcy? Contact Our Office.
Are you considering filing for Chapter 13 bankruptcy? Our knowledgeable legal team can help you file your petition and ensure that you meet all statutory deadlines. Chapter 13 gives you three to five years to repay your debts.
Contact our office at (414) 369-2390 to schedule a free, no-obligation consultation. Call now to speak directly with an experienced bankruptcy attorney.