Whether a plan can be modified if your financial situation changes.
What Is A Chapter 13 Repayment Plan?
When you file Chapter 13, you create a plan to reorganize your debt. What might this look like?
Let’s say you’re $10,000 behind on your mortgage payments. In the Chapter 13 plan of reorganization, we put that $10,000 in your plan to be paid to a Chapter 13 trustee over the course of a commitment period.
A commitment period for Chapter 13 bankruptcy must be at least 36 months but not longer than 60 months. If you are behind on car payments, this plan can incorporate those missed payments into the balance, helping you keep your house and your vehicle.
What Factors Determine The Length Of Your Chapter 13 Repayment Plan?
Income levels are a significant factor. If you go above the median income for your household size in the United States, you are obligated to be in a Chapter 13 plan for 60 months. If you’re below the median income for your household size, you can be in a Chapter 13 plan for as little as 36 months.
In many cases, regardless of your income level, you’ll be put on a 60-month plan. This helps keep your payments more affordable and easier for you and your family to manage in the long run.
How Are Debts Prioritized In A Chapter 13 Repayment Plan?
Secured creditors are typically paid first in a plan, followed by protection payments to a car creditor, attorneys fees, and administrative fees for the trustee every time a payment is made. Finally, general unsecured creditors will be paid.
Attorney Mike Wallace is an insightful attorney serving Texas. For nearly 20 years, he’s helped clients just like you understand their Chapter 13 repayment plans and efficiently get out from under debt.
Have questions about Chapter 13 bankruptcy? Interested in learning more about your options? Reach out to Mike Wallace, P.C., at (888) 402-5557 for an initial consultation today.
Can A Chapter 13 Repayment Plan Be Modified If My Financial Situation Changes?
Most repayment plans can be modified, and there are circumstances where that is appropriate. Reasons for modifying a plan may include a reduction of your income, leaving you with less money to make payments. In cases such as this, your attorney may be able to work out a modification that lowers your monthly payments.
What Are The Common Challenges People Face With Chapter 13 Repayment Plans?
One of the most important things to do is to stay disciplined in making sure that planned payments are made on time and in full. Some clients struggle with this, but part of a successful repayment plan involves being on top of payments and making paying them on time a top priority.
Insights From Years Of Practice
In my nearly 20 years of Chapter 13 bankruptcy work, I’ve learned that there are a myriad of different financial situations where someone can benefit significantly from Chapter 13 bankruptcy.
One very specific thing that I have learned is that there are instances where we can save someone a significant amount of money by using Chapter 13 to pay a car creditor what the vehicle is worth rather than what is owed on the vehicle at the time of filing.
This is known as a “cram down”, and it’s quite useful. I’ve guided many clients through this process. You can cram down vehicles and manufactured homes as long as they are still personal property and have not been made part of the real estate.
Still Have Questions? Ready To Get Started?
For more information on Understanding The Chapter 13 Repayment Plan, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (888) 402-5557 today.
Whether a new mortgage can be negotiated through Chapter 13 bankruptcy.
Common pitfalls to avoid when filing for Chapter 13 bankruptcy.
What Is Automatic Stay, And How Does It Prevent Foreclosure?
Immediately upon filing the bankruptcy petition, an automatic stay is put in place, meaning that no creditor can take any action related to you without going through the bankruptcy process. This has an extremely helpful and immediate impact on foreclosure proceedings as well, stopping the process in its tracks.
There are a great many people who need to stop foreclosure immediately, but they can not get current on mortgage payments, and the entire balance may now be due. Filing Chapter 13 bankruptcy puts that automatic stay in place and stops the foreclosure, allowing you to restart mortgage payments at a rate you can manage.
What Is The Process For Including Mortgage Arrears In A Chapter 13 Plan?
If you are $5,000 behind on payments to a mortgage company, that $5,000 is what we refer to as an arrearage. As you make plan payments for that amount to the Chapter 13 trustee, the trustee, in turn, pays the mortgage company.
However, our Chapter 13 trustee is not a pass-through trustee in the Eastern District of Texas. In other words, all payments due after filing the bankruptcy petition are made directly to the mortgage company, not our trustee.
Can You Negotiate New Mortgage Terms Through Chapter 13 Bankruptcy?
Yes, you can. You can still seek a modification of your mortgage while you’re in Chapter 13. While obtaining that modification comes with some challenges, it’s not an uncommon practice, and a seasoned bankruptcy attorney can help you navigate that process and negotiate new terms.
What Are The Potential Pitfalls To Avoid When Using Chapter 13 To Stop Foreclosure?
Chapter 13 bankruptcy is meant to help you get current on payments and keep your home, not delay foreclosure. Using Chapter 13 to delay foreclosure puts the cart before the horse. Ideally, you should be filing for Chapter 13 bankruptcy if you are behind on mortgage payments and are already facing foreclosure. Now, you can put those arrearages in the Chapter 13 plan and repay them over time.
What Are The Long-Term Effects Of A Chapter 13 Bankruptcy On Homeownership?
If you’ve been clear of a bankruptcy discharge for two and a half years and have maintained creditworthiness, you may fully qualify for a federally guaranteed mortgage.
On the other hand, failing to comply with the Chapter 13 repayment plan can cause your case to be dismissed. At that point, you will no longer have the protection of automatic stay in place, and the mortgage company can restart the foreclosure process.
It is very important to maintain your payments under the repayment plan; if you don’t, you could wind up right back where you started and face foreclosure all over again.
For more information on How Chapter 13 Bankruptcy Can Help Stop Foreclosure, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (888) 402-5557 today.
Common errors to avoid when filing for Chapter 7 bankruptcy.
The consequences of not listing all creditors as you file.
The importance of documents and deadlines when filing for Chapter 7 bankruptcy.
How Can Failing To Complete The Means Test Correctly Affect Your Chapter 7 Bankruptcy Case?
Failing to correctly fill out the means test could lead to two different outcomes. In one scenario, you could believe that you qualify for Chapter 7 bankruptcy, but you don’t, as a deduction or stream of income was not properly reported in the means test.
In another situation, you may incorrectly believe you don’t qualify because you have failed to take deductions that would not have counted against you. Understanding the means test and filling it out correctly is crucial, so reviewing the document with a bankruptcy lawyer beforehand is important.
Why Is It Important To Disclose All Assets When Filing For Chapter 7 Bankruptcy?
First and foremost, you’re swearing under oath that you have disclosed all of your assets. That could have serious consequences if it is discovered that you own assets that were not disclosed in the schedules. From an ethical point of view, you have an absolute obligation to disclose all of your assets.
Can Transferring Assets Before Filing For Chapter 7 Bankruptcy Lead To Problems?
Potentially, yes. If you transfer assets before filing for bankruptcy, you must still disclose those transfers in a statement of financial affairs. This documents who the asset was transferred to and the consideration that paid for the transfer. Transferring assets will still raise the question of what you did with the money associated with that transfer, and those questions will need to be answered.
You can’t simply transfer assets into someone else’s name. But you do have the right to, for example, transfer a car by selling it. This simply needs to be disclosed when filing for bankruptcy.
Attorney Mike Wallace is a focused bankruptcy lawyer serving Texas. For nearly 20 years, he’s helped clients just like you navigate Chapter 7 bankruptcy, making the process simpler to understand and avoiding the serious mistakes that could lead to a dismissal.
Have questions or concerns about Chapter 7 bankruptcy? Reach out to Mike Wallace, P.C., at (888) 402-5557 today!
What Are The Consequences Of Running Up Debt Before Filing For Chapter 7 Bankruptcy?
Running up debt makes that debt non-dischargeable, meaning the debt run up before filing will still be there, waiting to be paid off after you come out of bankruptcy.
This can have negative consequences, and it’s best not to run up debt before filing.
What Are The Risks Of Not Listing All Creditors In Your Bankruptcy Petition?
You may realize that you owe money to a creditor, but you don’t have enough information from them to properly list them. You may have simply gotten a phone call and not yet received their contact and other information.
Fortunately, the current law states that if you file a no-asset Chapter 7 bankruptcy and fail to list a creditor, that creditor still gets discharged as long as the debt was incurred before the bankruptcy petition was filed.
Why Is It Crucial To File All Required Documents Accurately And On Time?
When you file bankruptcy, you swear under oath that your schedules are accurate. If they’re not and someone learns that they’re not accurate, then it could have such serious consequences that your bankruptcy could be dismissed.
There are time frames in which certain documents must be filed and information disclosed to the bankruptcy trustee. If this isn’t done, it can lead to certain documents being dismissed by the court or the whole bankruptcy petition being dismissed.
It is very important that the information in all documents is accurate and that they are submitted on time. To this end, having a knowledgeable attorney review and file all documents with you is central to ensuring your petition is filed correctly and that past creditors are discharged.
For more information on Mistakes To Avoid When Filing Chapter 7 Bankruptcy, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (888) 402-5557 today.
Attorney Mike Wallace is a focused bankruptcy lawyer serving Texas. For nearly 20 years, he’s helped clients just like you navigate Chapter 7 bankruptcy, making the process simpler to understand and avoiding the serious mistakes that could lead to a dismissal.
Have questions or concerns about Chapter 7 bankruptcy? Reach out to Mike Wallace, P.C., at (888) 402-5557 today!
WHEN IT COMES TO CONSUMER BANKRUPTCY CHAPTER 13 IS OFTEN THE BEST CHOICE
Even though Chapter 7 bankruptcy can have many benefits for the Debtor who qualifies and has mainly unsecured debt they are seeking relief from, Chapter 13 bankruptcy has many advantages over Chapter 7. Chapter 13 has the following advantages:
If a Debtor is behind on mortgage payments and wants to save their home from foreclosure, Chapter 7 can prevent a foreclosure, but only for a temporary time. Chapter 13 allows for the restructuring of the arrearages to be paid over time.
An unsecured mortgage lien can be stripped off in a situation where the Debtor is underwater on their mortgage.
Chapter 13 bankruptcy allows a Debtor to keep their options open. The Debtor can most of the time dismiss and refile, can voluntarily dismiss the Chapter 13 or can convert to a Chapter 7 bankruptcy.
Mortgage holders are generally willing to work with a Chapter 13 Debtor related to loan modifications.
For a short period of time a Debtor can get a vehicle back after repossession.
If a motor vehicle was financed more than 910 days prior to a Chapter 13 bankruptcy, the creditor can be paid the value of the vehicle instead of what is owed on the vehicle. Additionally, Debtors who have a clear title to a vehicle and then borrow against that vehicle can pay the lender the value instead of what is owed.
Debtors can avoid the Reaffirmation Agreement process in Chapter 13 and avoid the risks associated with reaffirming the contract on a vehicle.
Debtors do not surrender non-exempt property in a Chapter 13.
Debtors maintain control over the disposition of non-exempt assets in Chapter 13 and can benefit from creditors not filing a claim in their Chapter 13.
Ability to deal with tax problems in Chapter 13.
Flexibility in the payment of attorney’s fees.
This is in no way an exhaustive list of the advantages of Chapter13, but it is some of the more common advantages. Please give me a call at (800) 867-1583 if you are considering filing a Chapter 13 bankruptcy and we can talk about your specific situation.
As always, any opinions expressed on this website are just that, opinions. Your individual situation might be different than outlined above, so it is probably best that you give me a call to discuss your individual situation. I pride myself on giving you the answers to your questions that are based on your individual circumstances.
IF YOUR DEBT EXCEEDS A CERTAIN LEVEL YOU CANNOT FILE A CHAPTER 13 BANKRUPTCY
Even though Chapter 13 is the best or only solution for you from a bankruptcy standpoint, you might not be qualified to file a Chapter 13 bankruptcy because of the debt limits.As of April 1, 2016, a debtor cannot have more than $1,184,200.00 in non-contingent, liquidated secured debt and $394,725 in non-contingent, liquidated unsecured debt. If you owe more than these amounts you can only file a Chapter 7 or Chapter 11mbankruptcy.
Please give me a call at (800) 867-1583 if you are considering bankruptcy.
As always, any opinions expressed on this website are just that, opinions. Your individual situation might be different than outlined above, so it is probably best that you give me a call to discuss your individual situation. I pride myself on giving you the answers to your questions that are based on your individual circumstances.
USING CHAPTER 13 BANKRUPTCY TO REORGANIZE PAYMENTS ON STUDENT LOANS
Under the United States Bankruptcy Code Section 523(a)(8), student loans are generally non-dischargeable in a bankruptcy. Since there is no dischargeability it is important to find a method to deal with the servicing of the debt.
Chapter 13 bankruptcy can be a good vehicle for managing payments on student loan debt, because the Debtor is only paying the debt according to their available disposable income while they are in the bankruptcy. I have even had clients who have filed a Chapter 13 because of student loan debt and upon completion of the plan, have refiled Chapter 13 because their disposable income still did not allow to pay the normal scheduled payment.
As always, any opinions expressed on this website are just that, opinions. So if you have a question regarding bankruptcy or debt relief, then please give me a call to discuss your individual situation. Bankruptcy, as many other areas of the law, can be very case or fact specific. I pride myself on giving you the answers to your questions that are based on your individual circumstances.
