What is Chapter 13 Bankruptcy?
Chapter 13 is often referred to as a “reorganization” bankruptcy. In Chapter 13, the Debtor makes a monthly payment towards a Chapter 13 Plan. In most cases, the Debtor does not have to pay all debts owed. A Chapter 13 case can be filed by a single person or jointly by two legally married persons.
Filed under Title 11, Chapter 13 of the United States Bankruptcy Code, the Plan states a proposed monthly payment which is deducted periodically from the Debtor's paycheck.
If the Debtor is not employed, the Office of the Chapter 13 Trustee will provide a means for the Debtor to pay the Chapter 13 Plan payment electronically via the internet each month, or set up an ACH bank account debit for the payment each month.
The benefits of filing for Chapter 13 bankruptcy:
- You have more time to pay off your debts
- You get to keep the property you are making payments on
- It can help you avoid foreclosure
- Chapter 13 bankruptcy is shown on credit report for only 7 years, rather than 10
- It helps with the IRS and can even get some of your taxes discharged
At Ryan Legal Services, our Chapter 13 attorney can explain how to file for bankruptcy and how it can help your situation. We are available Saturday to clients in Loxley, Mobile, and throughout Baldwin County. Additionally, with our 24/7 case access, you can stay up to date with your case.
How long does Chapter 13 bankruptcy take?
The bankruptcy will take about three to five years to be discharged. The filing process is a few months long.
Who can declare chapter 13 bankruptcy?
Chapter 13 bankruptcy is intended for individuals and those filing jointly as spouses. You can’t file for Chapter 13 in the name of a business, but if you’re a business owner, you can file just in your name. If you’re looking for a business option, you probably want to look into Chapter 11 bankruptcy instead.
Aside from being an individual, you must also prove adequate income. Accepted types of income include wages, salary, social security benefits, child support, royalties, unemployment benefits, and more. You may also use your spouse as a source of income.
Additionally, your debts must not be too high. The current accepted limit is $465,275 for unsecured debts and $1,395,875 for secured debts.
If you don’t meet one or more of these qualifications, our lawyers can still help you find the right bankruptcy plan for your needs.
Considering filing for Chapter 13 bankruptcy? Make an appointment for a free initial consultation with a Mobile Chapter 13 lawyer by contacting us online or dialing (251) 241-5234.
What is the difference between Chapter 7 and Chapter 13 bankruptcy?
To put it simply, Chapter 13 bankruptcy is a repayment plan. It’s for reorganization. It helps you pay off your secured debts without losing them. This means no foreclosure, no repossession, no wage garnishment, and debt consolidation.
Chapter 7 bankruptcy is about liquidation, and it can apply to businesses as well. It’s a much faster process, but you risk foreclosure and repossession.
Can I Keep My Assets in Chapter 13 Bankruptcy?
If you are considering filing, you may wonder if you can keep your assets, such as your car and home. When filing Chapter 13, you have the opportunity to retain your assets while repaying your debts over a specified period. This is in contrast to Chapter 7 bankruptcy, where some assets may be sold to pay off creditors.
Can I Modify My Repayment Plan If My Financial Circumstances Change?
Yes, it is possible to modify your Chapter 13 repayment plan if your financial circumstances change during the course of your bankruptcy. Chapter 13 is designed to provide flexibility and accommodate changes in your income or expenses.
If you experience a significant financial hardship, such as a job loss, medical emergency, or other unexpected expenses, you may be eligible to seek a modification of your repayment plan. The modification process allows you to adjust the terms of your plan to better align with your current financial situation.
To modify your repayment plan, you need to demonstrate a significant change in circumstances that affects your ability to make the original plan payments. This may involve providing documentation of your financial hardship, such as proof of income loss, medical bills, or other relevant information.
When you have the proof, will need to file a motion with the bankruptcy court to request a modification. An experienced Mobile bankruptcy Chapter 13 lawyer can assist you in preparing and filing the motion on your behalf. The court will review your request, consider your changed circumstances, and determine whether a modification is appropriate. If they approve it, your repayment plan will be adjusted.
For experienced counsel, get in touch with a Chapter 13 attorney in Mobile at (251) 241-5234.
Can Chapter 13 Help With Tax Debt?
Filing Chapter 13 bankruptcy can be helpful in addressing certain types of debts, including tax debts and child support payments. While bankruptcy may not eliminate these obligations entirely, it can provide a structured repayment plan that allows you to catch up on overdue payments and manage your financial obligations more effectively.
When it comes to tax debts, Chapter 13 allows you to pay off your tax debts in manageable installments while protecting you from aggressive collection actions, such as wage garnishments or bank levies. However, it's important to note that not all tax debts may be dischargeable in bankruptcy, particularly recent tax obligations.
Can You Put Child Support in Chapter 13?
Child support obligations are generally considered a priority debt, which means they can't be discharged in Chapter 13 bankruptcy. In a Chapter 13 repayment plan, you work out a schedule to pay off your debts over three to five years. Priority debts, like child support, must be paid in full during this period.
If you fall behind on child support payments, filing for Chapter 13 can help by giving you a structured plan to catch up on arrears while keeping your other assets safe from liquidation. However, you must keep current on your ongoing child support obligations during the repayment plan.
It's crucial to understand that while Chapter 13 can help manage your child support arrears, it doesn't eliminate your obligation to pay current and future child support. Failure to make these payments during and after your Chapter 13 plan can lead to legal consequences. So, while you can address past-due child support in a Chapter 13 bankruptcy, it doesn't alter your ongoing responsibility to make timely support payments.
