Chapter 13 Bankruptcy
A Chapter 13 attorney may be the solution you’re looking for if you’ve hit a financial wall and are uncertain of what to do next. Chapter 13 bankruptcy has provided many families with a fresh start and a brighter future.
What can you do? What are your options? One alternative is to file Chapter 13 bankruptcy. While bankruptcy may seem an extreme choice, this form of legal protection can provide space for you to regroup, reorganize and save your assets.
Chapter 13 bankruptcy offers debt relief by creating a repayment plan that you can live with. No more staying up late at night with worry, wondering how you’re going to face another day. Instead, you get to keep your house and car and other assets, establish a monthly pay-back plan that is manageable for you, and move forward with your life.
If this sounds like an ideal next step for you, contact the Chapter 13 attorneys at Bunch & Brock at (859) 254-5522 for an initial consultation about your situation. You’ll be glad you did!
Debt Relief Through a Chapter 13 Repayment Plan
Often called “wage earner” bankruptcy, Chapter 13 bankruptcy is for people who have a steady source of income but may be overwhelmed by debt payment obligations. Falling behind on mortgage payments is a common scenario in this circumstance. One of the most significant benefits of filing for Chapter 13 is that it halts foreclosure proceedings and offers you a chance to keep your family in your home. It removes the threat of upheaval and eliminates the need to find a different place to live.
Chapter 13 bankruptcy allows you to repay a portion of your debt via a court-approved repayment plan. Following successful completion of the repayment plan, all remaining eligible debt is discharged. This means some credit card debt, department store debt and loans will be eliminated for good.
Advantages of Chapter 13 Bankruptcy
When you file for Chapter 13 bankruptcy protection, you put an immediate end to litigation, wage garnishment and other forms of harassment. You can take time to assess your situation and focus on restructuring debt. Working with a Chapter 13 attorney allows you the opportunity to repay your debts under better conditions and at lower interest rates.
Chapter 13 vs. Chapter 7
The focus of Chapter 7 bankruptcy is liquidation of assets, which means a court-appointed Trustee sells all of your nonexempt property to pay creditors. Chapter 7 is for individuals and business owners who do not have enough disposable income (and assets) to qualify for Chapter 13. After a Chapter 7 case is discharged, all qualifying debts are dismissed; if there is not enough to pay all creditors off, some receive nothing.
In contrast, Chapter 13 is a “reorganization” bankruptcy, which provides relief from creditor harassment while you determine a workable payment plan. The goal is to allow you to keep your property and let creditors collect at least a partial repayment. In some cases, you can reduce the balance on an upside-down home or car loan to the current market value of the property. It is also possible to discharge a second or third mortgage lien against your house.
We Can Help
To discover whether this is a right move for you, contact a Chapter 13 attorney at Bunch & Brock at 859-254-5522. For more than three decades, Bunch & Brock in Lexington, Kentucky, has provided assistance to individuals and families overcome by financial problems. Chapter 13 attorneys at our firm take the time to understand your situation and explain available options for relief.
Satisfying a Repayment Plan
In a Chapter 13 bankruptcy, you agree to a payment plan that includes reimbursing unsecured creditors with a sum determined to be equal to the value of the asset. Examples of unsecured creditors are companies that do not hold a deposit or lien on your house or title to your car. (This includes credit cards, loans used to purchase furniture, etc.)
The U.S. Bankruptcy Code gives you up to five years to repay your creditors under Chapter 13. The minimum amount you will have to repay depends on how much you earn, how much you owe and how much your unsecured creditors would have received if you had filed Chapter 7.
Your repayment plan will have to be approved by the courts. A repayment plan can be created even if creditors disagree with it. Once you complete all necessary payments, the remainder of your outstanding eligible debts will be eliminated.
Time Is of the Essence
When dealing with serious financial issues, time is of the essence. Postponing action may cost you some of your rights. If you wait too long to pursue Chapter 13 bankruptcy, you may forgo this as an option. For example, one or more creditors may obtain a judgment against you that can force you into Chapter 7 bankruptcy and the resulting loss of your property.
Conferring with an experienced Chapter 13 attorney is an important first step on the path toward financial stability. Bunch & Brock bankruptcy attorneys provide compassionate counsel and assistance to help you move on and move forward. We assess your individual situation and make sure you understand all options; then we provide our recommendation for resolving the difficulty to your greatest protection and benefit.
How Do I Choose Which Assets to Keep?
Some of this is a personal decision and some of it is determined by the courts. In Chapter 13, you can keep all of your property. However, some property is considered “exempt” and other property is “non-exempt.” Exempt items that you retain are meant to give you a fresh start by allowing you to keep property you’ll need to maintain a home and job. Some examples of “exempt” property include:
- Partial equity in a primary residence
- Household goods
- Some equity in a car, truck or SUV
- A qualified retirement account.
Items that are “non-exempt” under Chapter 13 include:
- Vacation condos or cabins
- Time shares
- Other non-essential luxury goods.
How much you repay creditors in Chapter 13 will be determined by a court-approved repayment plan. As for “non-exempt” property you decide to keep, you will have to pay creditors the value of each item in the 3- to 5-year period allowed under Chapter 13. Obviously, the more you keep, the more you will likely pay.
How Is My Repayment Plan Calculated?
Several factors affect the repayment plan that will ultimately be approved by the courts. In Chapter 13, you propose a plan that includes monthly payments to creditors. Several complex laws are at play, but generally the following help determine the amount of your monthly payment:
- your household income
- the property you own
- your monthly living expenses
- the amount of debt that you owe.
How much disposable income you have (after monthly expenses) and the number of years included in your repayment plan will help determine the amount of money you will need to pay each month under the plan. For a more detailed explanation of “exempt” and “non-exempt” property, contact a Kentucky Chapter 13 lawyer at 859-254-5522.
Will My Spouse Be Affected By My Bankruptcy?
If you are married, you can file a joint bankruptcy with your spouse or you can file a bankruptcy as an individual without your spouse. But even if you file alone, your bankruptcy may affect your spouse. Whether your bankruptcy impacts your spouse is determined by:
- whether you file Chapter 13 or Chapter 7
- whether you have joint property and debts in your and your spouse’s names together
- property laws of the state in which you reside.
Generally, your individual bankruptcy will not affect your spouse’s FICO credit score. However, if you have joint debts, the fact that you filed for bankruptcy to discharge these debts may show up on your spouse’s credit report. And even though you, as the bankruptcy filer, will be relieved of responsibility for the joint debt, creditors can still come after your spouse to collect any joint debt. So, if you’re married it’s important that you and your spouse talk through all of your bankruptcy choices before deciding how to proceed. A skilled Chapter 13 attorney can help you weigh your options.
How Much Time Do I Have To Make a Decision?
You can take whatever time is needed to make an informed decision. But make sure you are not dragging your feet to avoid the inevitable or lounging in denial about your financial problems. Don’t put off bankruptcy indefinitely if that’s the best path for you and your family. Generally, the longer you wait, the narrower the path becomes and the fewer options you have.
How Long Will a Bankruptcy Show Up on My Credit Report?
Be prepared. Bankruptcies stay on your credit report for a number of years and will negatively affect your ability to get a loan or a credit card at an attractive interest rate. However, if bankruptcy is your only choice for a fresh start, then this is something you will have to deal with. The length of time a bankruptcy stays on your credit report is determined by the type of bankruptcy you file:
Completed Chapter 13 bankruptcies stay on your credit report for 7 years.
Chapter 7 bankruptcies stay on your credit report for 10 years.
Will a Bankruptcy Affect My Employment?
In most cases, bankruptcy won’t affect your current employment. However, a bankruptcy could affect your future job prospects if you leave your current job and look for another one. Increasingly, corporations and private industry review prospective employees’ credit reports (along with other historical data) as part of their decision about whether or not to extend a job offer. Just as many employers now require a pre-employment drug test, several are also reviewing a candidate’s credit history.
How Do I Choose a Chapter 13 Attorney?
That’s a great question. Clearly, all attorneys are not created equal. Some lawyers return your calls quickly, and others take days to respond. Some attorneys answer your questions and explain things in great detail, and others keep checking their watch or iPhone and rush you through a meeting. To find the best Chapter 13 lawyer for you, review a law firm’s web site and read the attorneys’ bios. See whether any clients have posted reviews about their experience with the firm. Doing a little homework of your own can lead you to a skilled and reliable Chapter 13 attorney. At Bunch & Brock, we’d be glad to have a conversation with you to find out about your individual needs. Call us at 859-254-5522.
How Will a Bankruptcy Affect My Children?
First, filing bankruptcy does not discharge any child support payments you owe going forward. Child support remains in place despite bankruptcy. Next, some good news is that your bankruptcy generally will not affect your child’s ability to get college student loans, nor will it impact any checking or savings account in their names alone. However, be careful about making any last-minute deposits into a child’s account before declaring bankruptcy as a way of protecting your own funds. Courts are very suspicious of such actions.
Your bankruptcy may affect, to some degree, any money you’ve already contributed to a 529 Educational Fund for your child. Under federal laws, any money you’ve deposited in an educational fund in the prior 365 days is not protected. Deposits made between 365 and 720 days before filing for bankruptcy are only partially protected. And deposits made longer than 720 days before bankruptcy are entirely protected.
Contact a Chapter 13 Attorney Now
There’s no time like the present to start a brighter future. Don’t let overwhelming financial burdens take the joy out of your life . To schedule a confidential appointment with a Bunch & Brock Chapter 13 attorney, please call 859-254-5522 today or contact us online.