If you are dealing with a difficult financial situation, Chapter 13 bankruptcy might be the answer for you. Chapter 13 bankruptcy can enable you to restructure your debts into a manageable payment plan that will last three to five years. Additionally, you can keep most of your personal property while eliminating your debt. By establishing a new payment structure, you can regain control of your finances.
If you have more debts than you can handle alone, but are unsure of what to do, an experienced Charlotte, NC Chapter 13 bankruptcy attorney can help. Contact the Law Office of Jack G. Lezman, PLLC for a consultation.
What Is Chapter 13 Bankruptcy?
Chapter 13 is the type of bankruptcy used for individual debt adjustment. Under this type of bankruptcy, the Bankruptcy Code allows eligible persons to keep their property and assets by gradually paying off their debts. This is also known as reorganization bankruptcy, since an individual ends up paying back most of his or her debts. The payment plan typically spans over the course of three to five years. After the payment plan has been concluded, the remaining debts are discharged. You should contact an experienced Chapter 13 bankruptcy attorney in Charlotte.
The debts that are eligible for the payment plan in Chapter 13 include secured claims, unsecured priority claims and general unsecured claims. A secured debt allows the creditor to take a person’s property if they don’t repay the debt. An unsecured debt, on the other hand, doesn’t allow the creditor to do this, as in the case of credit cards or medical bills. The priority debts are debts in which the creditor can’t collect on a debtor’s assets, but bankruptcy law gives them special rights so as to ensure that they get their money. These have to be paid back in full, unless the creditor otherwise states.
The debtor that chooses to file for Chapter 13 is entitled to discharge of debts after all payments under the plan are made. If you are filing for this type of bankruptcy, then it is very important to contact an experienced Charlotte bankruptcy attorney from the Law Office of Jack G. Lezman, PLLC so our legal team can advise you on the best course of action to pursue for your individual case.
Am I Eligible for Chapter 13 Bankruptcy?
Chapter 13 bankruptcy entails repaying your debts from your income. Therefore, the court will require that you prove that you can meet your payments. Incomes that are irregular or too low will most likely not be eligible. In addition, if a person’s total debt burden is too high, then they may not able to file for Chapter 13 bankruptcy. If you want to see if you qualify for Chapter 13 bankruptcy, then an attorney from our firm can help you take a bankruptcy means test, which will assess your specific situation.
When determining if you qualify for Chapter 13 bankruptcy, your attorney will consider the following:
- Debt Limit – Your secured and unsecured debts may not exceed certain amounts, as established by bankruptcy code. The debtor’s secured debts need to be under $1,010,650 and unsecured need to be under $336,900.
- Steady Income – You must have an adequate income to file Chapter 13 bankruptcy. The court will ensure that you are able to meet your monthly household obligations as well as payments on a repayment plan.
- Individual Status – Only an individual may file Chapter 13 bankruptcy. This option is not available to businesses. However, if you have business-related debt that you are personally responsible for, it may be included in your payment plan.
Chapter 13 Bankruptcy Process
Chapter 13 is one of the more complicated methods of filing bankruptcy. Although it is more complex than Chapter 7 bankruptcy, it is easier than many of the chapters of business bankruptcy. It’s important to work with a Chapter 13 bankruptcy attorney throughout the process. He can help you make sure you complete all necessary forms, submit appropriate evidence, and meet deadlines.
Mandatory Credit Counseling for Chapter 13 Bankruptcy
Prior to filing for bankruptcy, you must take a mandatory credit counseling course. The course will evaluate your finances and help you understand credit in broad terms. The course may cost between $25 and $35, but is often available online. If you cannot afford to pay for the course, you may be able to find a free or reduced price course.
Filing for Chapter 13 Bankruptcy
After you consult with your attorney, they will gather necessary information and file for bankruptcy on your behalf. You will also be required to pay a bankruptcy filing fee, which will likely be separate from your legal fees. You must submit bankruptcy forms as well as proof of the mandatory credit counseling to the court when filing for bankruptcy.
Establishing a Chapter 13 Repayment Plan
An important element of your Chapter 13 bankruptcy is the repayment plan. The repayment plan gives you between three and five years to address your debts. You will propose a repayment plan that encompasses all of your debt to your creditors and the court. It’s important to work closely with your attorney to establish a plan that works for you. Consider all of your current monthly household expenses. Then determine how much you can comfortably afford to put towards a repayment plan.
Chapter 13 Meeting of the Creditors
Your repayment plan will be reviewed by your creditors and your trustee. The trustee will both have an opportunity to comment on your proposed plan at the meeting of the creditors. However, creditors rarely attend the meeting of the creditors unless they want to challenge the validity of a debt. In most cases, the trustee will ask you questions and review your Chapter 13 bankruptcy paperwork. Your attorney can attend most bankruptcy hearings on your behalf. However you must attend the meeting of creditors in person or via phone, in some exceptional circumstances.
Confirmation of Your Chapter 13 Repayment Plan
The court will review your repayment plan and have an opportunity to approve it or “confirm” it at a hearing. If creditors have no objections to the plan, the court will determine if the repayment plan is feasible, made in good faith, and complies with bankruptcy laws. If your repayment plan is confirmed, then you will begin making payments and your creditors’ collection efforts will be put on hold while they receive a portion of payments you make through your plan.
Final Step of Chapter 13 Bankruptcy
Once you complete your repayment plan, you will have paid off a portion of your debts. Those that you do not completely repay may be discharged. You will also have to complete a budget counseling course to finalize your bankruptcy. This will help you get back on track to managing your debts.
What Happens If I Can’t Make My Payments?
If you have already filed for Chapter 13 bankruptcy and find that you can’t keep up with your payments, then the court will most likely reassess your plan. The bankruptcy trustee that is overseeing your case may choose to modify the payment plan. Or he may even discharge your debts on the basis of hardship.
If the courts don’t choose to let you change your plan, you may want to try to convert your case to a Chapter 7 bankruptcy plan. In addition, you could also ask the courts to dismiss your case; however, you would still owe your debt plus the interest that was not incurred while your case was pending.
How a Bankruptcy Attorney in Charlotte Can Help You
The laws pertaining to Chapter 13 bankruptcy can be quite complex and often changes. It is important to obtain strong legal counsel from a Charlotte bankruptcy lawyer as you pursue this type of bankruptcy. A significant number of individuals who have chosen to file for bankruptcy can benefit from a Chapter 13. This type of bankruptcy allows an individual to establish a payment plan to repay the debts they owe in an affordable manner.
When you work with our firm, our legal team can provide you with comprehensive information concerning your debt and the proper method for your situation. Even if you don’t know where to start, we can help you obtain the necessary information regarding your property and other parts of your financial situation.