Chapter 13 bankruptcy is often referred to as a wage earner plan. When you file this type of bankruptcy you will propose a plan to pay some or all of your debt over the course of up to five years. Reasons for filing a Chapter 13 vary, but many people do it to halt a foreclosure or repossession. Chapter 13 may also provide relief from student loans or a way to repay tax debt. Others may file a Chapter 13 because they want to pay what they can but cannot pay all of their debt.
In a Chapter 13 you can generally keep your assets while you repay your debts. The amount of your payment will be dictated by many factors such as your assets, income, expenses, amount of priority debts and amount of secured debts.
Priority debts are debts that must be paid in full and include certain tax payments, alimony and child support. Secured debts are debts that have collateral such as your car or your house. You will have to provide payments for secured debts if you intend to keep the collateral.
While in a Chapter 13 you will be on a budget with a payment being made pursuant to your plan. If you do not have sufficient income to make the payment in a Chapter 13 case you should consider other options. If you begin a Chapter 13 and fail to make payments under the plan your case may be dismissed by the court. Such dismissals are commonplace.
We offer a free consultation which will normally start the process of filing for bankruptcy. At the consultation we will examine your situation and go over such things as your property, income, expenses, debts and financial transactions. Your bankruptcy options and the associated costs will be explained to you. You will also have time to ask questions, because we believe every client should know what to expect when filing bankruptcy.
Once you hire the Law Office of Michael J. McVay, we will go through the documents which you brought with you and determine what additional documents are needed to file for bankruptcy. Once the appropriate documents are received we will create your bankruptcy paperwork for signing and filing. Before filing your case you will need to complete credit counseling class. You will also need to complete a second credit class after you file. These classes are commonly done online.
Once your case is filed a notice will be sent to you and your creditors. This notice will contain your hearing date and time. The hearing is called a 341 meeting. At the 341 meeting you will be asked questions by a trustee who represents your creditors.
A Chapter 13 plan is among the documents that will be filed with the court. The trustee or creditors will have an opportunity to object to your Chapter 13. When the plan meets the requirements of the bankruptcy code and any objections are resolved, the court will confirm your plan. Then it will be your responsibility to live up to the plan you proposed by continuing the appropriate payments. The plan payment is set when the plan is confirmed but it is possible for the amount of the payment to change depending on what occurs over the life of your plan. When you complete your plan payments you may be eligible to receive discharge. A discharge is an order of the court that will relieve you of your obligation to pay most debts.
If you have a second mortgage, be sure to ask us about the possibility of eliminating the second mortgage in a Chapter 13 case. This is not available to everyone but may be possible if the proper circumstances exist.
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