For some debtors, a Chapter 13 bankruptcy is the best option for eliminating debts and protecting assets. A Chapter 13 bankruptcy is often referred to as a wage-earners bankruptcy case or a debt repayment plan. In a Chapter 13 case, the debtor proposes a repayment plan that reorganizes debt into a manageable monthly payment. While a Chapter 13 case may take longer to complete than a Chapter 7 case, filing for bankruptcy relief under Chapter 13 offers several benefits that filing under Chapter 7 cannot offer.
If you have debts that you cannot afford to pay, contact a Chapter 13 bankruptcy attorney to discuss filing for bankruptcy relief. During your free consultation with a bankruptcy lawyer, you will learn about filing Chapter 13 and how a bankruptcy case can resolve your debt problems.
There are many benefits of filing under Chapter 13. Filing a Chapter 13 bankruptcy case can allow you to:
Depending on your situation, there could be other benefits of filing a Chapter 13 case. Learn how filing a Chapter 13 case can help you during your free consultation with a Chapter 13 bankruptcy lawyer.
Calculating the amount of a Chapter 13 repayment plan can be complex. A plan payment is based on many factors, including your debts, disposable income, equity in assets, and other financial matters. Bankruptcy lawyers work diligently to calculate bankruptcy plans that satisfy the court, but give you the lowest monthly payment possible given the facts in your case.
Five factors that influence the amount of your Chapter 13 payment are:
Some debts must be paid in full in a Chapter 13 plan. Therefore, those debts must be included in the base amount of your plan. Examples of priority debts include most income tax debt, child support, alimony, and administrative expenses.
Federal and state bankruptcy exemptions typically protect all the equity in a debtor’s property. However, some debtors may have assets with non-exempt equity. The advantage of filing a Chapter 13 instead of a Chapter 7 is that you can protect those assets by paying an amount equal to the non-exempt equity to your unsecured creditors. In a Chapter 7 case, the trustee would sell the asset to pay unsecured creditors. In a Chapter 13 plan, you pay the creditors what they would receive in a Chapter 7 case to keep the property.
Another advantage of filing under Chapter 13 is that you can save your home from foreclosure. The amount of your mortgage arrearage is included in the base of your plan. Instead of paying the entire past due balance all at once, you have up to five years to catch up the payments.
Most vehicle loans are included in your Chapter 13 plan so that you can lower the monthly payments by including the loan in the plan. In some cases, you may be able to lower your interest rate on the loan or value the loan at an amount equal to the value of the vehicle.
The Means Test determines your disposable income. Your disposable income is calculated by examining your income and allowable monthly expenses. Your plan payment must equal or exceed your disposable income. However, a Chapter 13 bankruptcy attorney reviews every expense allowed under the Bankruptcy Code to lower your disposable income as much as possible.
It can be difficult to know which chapter of bankruptcy is best for your financial situation. Furthermore, the Means Test can be complicated and difficult to complete without the assistance of an experienced Chapter 13 bankruptcy lawyer.
Bankruptcy attorneys offer free bankruptcy consultations so that you can learn more about filing for bankruptcy relief. Your attorney analyzes your financial situation to determine your options for getting out of debt. The attorney explains each option, including bankruptcy and alternatives to bankruptcy, so you can decide what is best for you.