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Chapter 13 Bankruptcy: Take Control of Your Debt

The Chapter 13 Repayment Plan Could End Creditor Harassment

Chapter 13 is a type of bankruptcy that allows consumers who are struggling with debt to seek relief through the court. Chapter 13 is commonly used by people who are facing home foreclosure, as it can stop that process in its tracks.

Thousands of people file a Chapter 13 plan with the court every month throughout the U.S., and find that it can allow them to keep their homes, cars and other important possessions while dealing with their creditors.

If you're struggling to pay your bills each month, filing for bankruptcy under Chapter 13 may allow to you get back on track by reorganizing your debts into one affordable monthly payment.

Considering Chapter 13 to get control over your finances? Ask a lawyer if filing Chapter 13 bankruptcy could help you eliminate your debt and stop foreclosure or repossession of your property. Just fill in the quick case review form below and connect with a lawyer for free:

Chapter 13 Bankruptcy vs Chapter 7

Unlike filing a Chapter 7 case, Chapter 13 does not involve a complicated means test in order to qualify.

Instead, Chapter 13 considers your ability to repay your total secured debts as the main qualification. Chapter 13 filers must have a predictable source of income that can be used to repay debts through the court.

Chapter 13 laws put limits on the total amounts of secured and unsecured debt that a filer can have.

Understanding Chapter 13

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Millions of people have turned to filing bankruptcy as a way to get out of debt, protect their hard-earned property and get back on track.

If you're interested in seeing if chapter 13 is right for you, complete the free bankruptcy case evaluation form and we'll connect you with a local bankruptcy lawyer for a confidential, no-obligation consultation.

The Chapter 13 Repayment Plan

Chapter 13 often provides relief for people who have faced short-term financial setbacks like job loss, illness or large unexpected expenses.

For people who have fallen behind on their bills but have regular income, filing bankruptcy under Chapter 13 may allow the breathing room they need to get back on track with their payments and keep their property.

Chapter 13 bankruptcy often provides relief for people who have faced short-term financial setbacks like job loss, illness or large unexpected expenses.

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Many people looking to stop foreclosure or avoid repossession file Chapter 13 bankruptcy because it allows them to catch up past due payments over a period of three to five years while keeping current payments up to date.

When a person officially files Chapter 13 bankruptcy, they typically receive the protection of the automatic stay, which is a court order that prohibits further collection efforts from creditors.

That means the calls stop and most legal action (like foreclosure, repossession, lawsuits or wage garnishment) is ceased. Sound like what you're looking for? Fill out the above form right now and talk to one of our sponsoring bankruptcy lawyers.

Discuss Chapter 13 With a Bankruptcy Lawyer

Chapter 13 bankruptcy can be a complicated process and mistakes in that process could potentially cost a bankruptcy petitioner the protection of the automatic stay or prevent a Chapter 13 bankruptcy repayment plan from being approved.

One of our sponsoring local bankruptcy attorneys can help you determine whether filing Chapter 13 bankruptcy is the right option for you. Then the bankruptcy lawyer can guide you through the process, ensuring that all filing requirements and deadlines are met and that you've accounted for all of your allowable expenses and proposed a plan that will allow you to make payments while keeping up your regular expenses.

Click below to talk to a local bankruptcy lawyer today:

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Chapter 13 Bankruptcy Pre-Filing Requirements

Since October of 2005, all personal bankruptcy petitioners filing bankruptcy overview under Chapter 7 or Chapter 13 of the U.S. Bankruptcy Code have been required to complete a U.S. Trustee approved Credit Counseling Briefing.

Your bankruptcy lawyer should file the Credit Counseling certificate with your bankruptcy petition.

This is an important action because bankruptcy petitions filed without a Credit Counseling certificate may be dismissed. This can have catastrophic results because it may allow creditors a window in which to take collection action, like moving forward with foreclosure or repossession.

Before filing bankruptcy, your bankruptcy attorney can direct you to an approved Credit Counseling agency or you can purchase an approved online Credit Counseling briefing at Start Fresh Today.

The Bankruptcy Process Under Chapter 13

A Chapter 13 bankruptcy case officially begins with the filing of the bankruptcy petition.

In most cases, the court will enter an automatic stay as soon as the case is filed, prohibiting creditors from taking any further collection action while the bankruptcy case is pending or until further order of the bankruptcy court.

The bankruptcy court will send notice to all of the creditors listed in the Chapter 13 petition and will assign a bankruptcy trustee to the case.

Within about 15 days after the petition is filed, the court will send a Notice of Commencement of Case to the bankruptcy petitioner and to all of the creditors listed in the bankruptcy petition.

This notice will include important information like the time, date and location of the creditors meeting and the deadlines for claims and/or objections from creditors.

Schedules containing information about the petitioner's debts, assets, income and expenses must be filed within 15 days after the case is commenced.

These schedules often are filed along with the petition; but where an emergency situation exists (for instance, if the petitioner is filing bankruptcy in order to stop foreclosure or repossession), they may be filed separately so that the petition can be filed immediately, without waiting to collect the required information and documentation for the schedules.

The 15-day deadline also applies to filing the Chapter 13 repayment plan.

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Will My Assets Be Liquidated in Chapter 13?

Unlike Chapter 7 bankruptcy, Chapter 13 bankruptcy does not involve a liquidation of assets.

Instead, Chapter 13 bankruptcy is intended to help people facing financial difficulty keep their property while gradually catching up on past due balances.

A typical Chapter 13 bankruptcy repayment plan is between 36 and 60 months.

During that time, the bankruptcy petitioner keeps current payments current and makes monthly payments toward past due balances. Debts are prioritized by the bankruptcy court and secured creditors get paid first.

Remaining disposable income goes to pay unsecured creditors, in a hierarchy established by the Bankruptcy Code.

A good aspect to filing Chapter 13 bankruptcy is that if all payments have been made as scheduled, unsecured debt remaining at the end of the plan may be discharged.

Pre-Discharge Requirements: Chapter 13 Bankruptcy

In addition to making payments as agreed to when filing bankruptcy under the Chapter 13 plan, Chapter 13 bankruptcy petitioners must complete a U.S. Trustee approved financial management course (often called Debtor Education) before a discharge may be granted.

Your bankruptcy attorney may refer you to a Debtor Education course, or you can purchase an approved, online Debtor Education course at Start Fresh Today. Talk to a lawyer today (for free) about what steps you should tale if you're going to file for Chapter 13.

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Who Can File Chapter 13 Bankruptcy?

Chapter 13 bankruptcy is not for everyone. In order to qualify for Chapter 13 bankruptcy, a debtor must:

  • Have a regular source of income from which to make pre-determined payments
  • Have enough disposable income to make regular payments after covering current necessary living expenses
  • Fall within pre-set limits for secured and unsecured debts. The limits are updated periodically and a local bankruptcy attorney can tell you the exact current limits for secured debts.

For those who do not qualify to file Chapter 13 bankruptcy, filing bankruptcy may still be an option; but perhaps in the form of Chapter 7 bankruptcy.

Both Chapter 7 and Chapter 13 bankruptcy can stop home foreclosure, repossession and lawsuits. Find a local bankruptcy lawyer to get protection today.

When does filing Chapter 13 make sense?

Whether filing bankruptcy under Chapter 7 or Chapter 13 or going with another alternative outside the bankruptcy process is the best fit depends upon the debtor, the circumstances, the amount and nature of the debt, current income and a variety of other factors.

Often, people find Chapter 13 bankruptcy helpful when:

  • They are behind on payments on secured property that they want to keep. Many people file Chapter 13 bankruptcy petitions specifically to stop foreclosure or vehicle repossession, but Chapter 13 may be equally useful for catching up on other secured debts while keeping the property that secures the debt. Learn more about cars in bankruptcy.
  • They have tax debts that cannot be discharged in a Chapter 7 bankruptcy case. Certain tax debts are non-dischargeable but some may be included in a Chapter 13 repayment plan and paid over time.
  • They have non-exempt property that they want to keep. In a Chapter 7 bankruptcy case, non-exempt property can be liquidated (sold) for the benefit of creditors, but in a Chapter 13 repayment plan, the debtor maintains his or her property while making scheduled payments.
  • They have filed for Chapter 7 bankruptcy within the previous eight years, and thus are not eligible to file Chapter 7.
  • They wish to protect co-signers on certain debts. In a Chapter 7 bankruptcy case, a co-signer remains liable for a debt even if that debt has been discharged for the primary debtor. However, if a debt is included in a Chapter 13 repayment plan, the co-signer is protected so long as the debtor complies with the plan.
  • They have past-due student loan debt. Student loans are not dischargeable in a Chapter 7 bankruptcy case except under certain very narrow circumstances, but some student loan debt may be included in a Chapter 13 repayment plan.
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Is Chapter 13 Bankruptcy Right for You?

If you'd like to learn more about filing bankruptcy--whether it's Chapter 7 or 13 bankruptcy--and whether it is a good fit for you and your financial situation, all you have to do is fill out the below form.

You can connect with a local bankruptcy lawyer who can assess your financial situation and help you decide which alternative might be right for you. Fill out the form right now and get started today.

If you've been putting off your debt, it's probably time to deal with it. Fill out the above case evaluation bankruptcy form to connect with a local attorney for free. Get your questions answered and learn about your options.

The above summary is not legal advice. Laws may have changed since our last update. For the latest information on bankruptcy laws, speak to a local bankruptcy lawyer in your state.

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