Answers To Common Questions About Chapter 13 Bankruptcy

Many persons have heard of Chapter 7 bankruptcy, also known as "liquidation bankruptcy." Another form of bankruptcy, Chapter 13 of the Bankruptcy Code, is less well-known as an option for individuals or families facing overwhelming debt.

Pratt & Wall, Attorneys at Law, have prepared answers to common Chapter 13 bankruptcy questions heard at our law office.

What Is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy involves the restructuring of your debts. Your available income is used to pay your expenses and a portion of your debt. Chapter 13 bankruptcy is appropriate only for debtors who have enough regular income to pay their current expenses and a portion of their debts. Basically, if, after paying all of your expenses mortgage, car payment, food, etc. you have at least $167 left over each month, you may qualify for Chapter 13. Under Chapter 13, the debtor is required to make payments to the appointed trustee for a maximum of 60 months. While the bankruptcy will safeguard your interests, the process is ultimately carried out under the supervision of the bankruptcy courts.

How Does Chapter 13 Bankruptcy Work?

While debtors are allowed to keep all of their property, the court approves a new interest-free repayment plan for unsecured debts. A written plan includes details of all the transactions that will occur and the duration. The repayment must begin within 30 to 45 days after the case has started.

One advantage of Chapter 13 over Chapter 7 bankruptcy is the ability to discharge unsecured portions of secured debt. If in a Chapter 7 you want to keep your car, you generally must pay the full amount owed on the vehicle. In a Chapter 13, the amount paid for the vehicle is reduced to the fair market value and any remaining portion is paid through the plan as unsecured, usually at pennies on the dollar.

Who Can File For Chapter 13 Bankruptcy?

The most important criteria for filing Chapter 13 bankruptcy is a regular income. There are a few other requirements; at your consultation, your attorney will be able to discuss the details.

What Are The Steps For Filing Chapter 13 Bankruptcy?

Our attorney will ensure that you don't get bogged down in trying to understand the complicated details of this answer. Essentially, filing for Chapter 13 bankruptcy entails the following:

  • Determine whether Chapter 13 is the best solution for you.
  • Prepare a budget.
  • Determine and implement methods of dealing with secured creditors.
  • Devise a Chapter 13 plan and fill out the forms.
  • Pay the filing fee and complete the process of filing the forms and pleadings.
  • Attend whatever meetings are required with creditors, court hearings, etc.
  • Prepare and file any required motions to strip liens or avoid liens.
  • Respond to inquiries and objections by the trustee.

There are a lot of details to consider for each case. Your attorney can wade through the details so that your case has the best chance of a smooth and successful process. We are here to help!

How Do I Start The Chapter 13 Process?

If you are ready to find out if Chapter 13 bankruptcy is in your best interest, the place to start is with our free consultation. Call 770-614-4811 or complete our online contact form for an appointment to meet with an experienced attorney.

Under federal law, we are designated as a debt relief agency. We help people file for bankruptcy under the Bankruptcy Code.