Eligibility requires consistent and reasonable monthly income
A Chapter 13 bankruptcy isn’t for everyone. You first must satisfy a state means test and, in most instances, enjoy a stable current income. Its debt reorganization approach may well be preferable to the clean sweep a Chapter 7 inflicts, however. Fillmore Spencer LLC has helped hundreds of find their way to a better financial footing through the use of Chapter 13.
Chapter 13 essentially permits the bankruptcy trustee and creditors to require you to complete an aggressive repayment plan to satisfy your reorganized debts. You have a better chance of protecting your home from creditors. The same goes for your car — in fact, a plan may require you to prepay future monthly payments on your car, saving you interest costs. As with Chapter 7, filing for Chapter 13 bankruptcy triggers an automatic stay against creditors’ efforts to collect the debts you owe them, including wage garnishments, foreclosure actions and car repossessions that may be under way. Of course, once the repayment plan goes into effect, there will be one garnishment you still have to endure — the payments that go your Chapter 13 repayment plan.
In Chapter 7 bankruptcy, your unsecured debt is written off, as may be all of your remaining home mortgage. In Chapter 13, you continue to shoulder all your debts, though the terms of your loans may be rearranged to make repayment easier. Debts for which you remain obligated include:
As noted, some of these debts may be renegotiated or rescheduled. Your bankruptcy trustee and creditors work with you to develop a repayment plan that will last for a three- to five-year period. The plan anticipates applying all of your disposable income to repaying your debt. At the end of the repayment period, you may be excused from any remaining unsecured debts, but you will still be responsible for your secured debts.
Chapter 13 is similar to Chapter 7 in that you must submit your prior six months’ income, minus certain expenses, to a means test. And as with Chapter 7, you will need to complete both a debtor education course and a credit counseling course.
Chapter 13 differs in that you are required to you attend a creditors meeting, conducted by your trustee, where you will need to explain why you need Chapter 13 protection, enumerate all your debts and answer any creditor questions.
Chapter 13 bankruptcy is a good solution for those deep in debt but who have income and do not want to give up assets like their home, car and business. If you have substantial equity in your home and you want to keep it, Chapter 13 is usually the way to go. Chapter 13 can help you fend off foreclosure or stop back taxes from accruing more interest in penalties.
Fillmore Spencer LLC bankruptcy attorneys know what bankruptcy court, the bankruptcy trustee and creditors want to see and how to negotiate terms for a Chapter 13 filing, so call us at (801) 426-8200 or contact us online to arrange for a free consultation to discuss your bankruptcy options and potential strategies.