Chapter 13 Bankruptcy Attorney Serving Surprise, AZ
Whether due to your own poor calculations or issues beyond your control in the larger economy, financial hardship is a reality you may have recently faced. Several legal tools are available to you when this happens, including chapter 13 bankruptcy.
Understanding Chapter 13 Bankruptcy
Chapter 13 bankruptcy is very different and much more complicated when compared to Chapter 7 bankruptcy.
Instead of keeping some property while losing other property, Chapter 13 generally involves keeping most or all of your property but making payments to your creditors to account for that property’s value over three to five years. While chapter 13 has other unique features, such as limits on the amount of debt you can have, it also offers powerful benefits to certain filers, such as cramming down vehicle loans or striping liens off homes, among other things.
Chapter 13 is not for everyone – not even for most people – but for the right people, it can be the perfect way to turn around your financial life and move in a new direction. It is absolutely imperative for a person considering a Chapter 13 bankruptcy filing to understand the process and to understand the potential pitfalls of doing so. A failure to do so may cause the case to fail, which would force you to file again under a different chapter of bankruptcy, if not chapter 13 again. This would very likely bring a plethora of additional hardships on you that a properly-planned filing would have prevented.
Filing Chapter 13 Bankruptcy
To file for chapter 13 bankruptcy, you must file a petition with the bankruptcy court in the area of your residence. You must include several things with this petition, including:
- Assets and liabilities;
- Current income and expenditures;
- Executory contracts and unexpired leases;
- A statement of financial affairs;
- A certificate of credit counseling and a copy of any debt repayment plan developed therein;
- Evidence of payment from employers from 60 days prior to filing;
- Monthly net income and any anticipated increase in income or expenses after filing;
- Any interest in federal or state-qualified education or tuition accounts.
Your case trustee must also receive a copy of your tax return or transcripts from the most recent tax year and any tax returns filed while your case is ongoing.
These documents can be complicated and confusing. As well, there are several exemptions under chapter 13 bankruptcy law that you may be eligible for. One of our bankruptcy court lawyers can help determine whether or not this is the case for you.
As if this was not enough, federal law requires you to file a chapter 13 plan over and above everything already listed. This is done after submitting your petition for chapter 13 bankruptcy. This plan outlines how you intend to treat your debts, liens, and the secured status of assets and liabilities. In order to be approved, it must show:
- You provide that unsecured creditors receive at least as much they under a chapter 7 liquidation.
- You not repay all creditors or commit all of your disposable income to the plan for at least three years unless you make more than the median income, in which case it is five years.
You will need to pay a number of fees.
Failing to fill out any of your forms correctly puts you at risk of having to file over again or significantly delaying your case. Do not let this happen. One of our chapter 13 lawyers can walk you through all of these details and help you understand them in the context of your specific case. They can also help unpack the advantages and disadvantages chapter 13 has.
Advantages
- Cease foreclosures;
- Allow super discharge of debts that cannot be discharged in chapter 7
make use of value collateral;
- Protects non-filing co-signers from collection activity.
Disadvantages
- Remains on your individual credit report for up to 7 years
- Cannot obtain additional credit unless the bankruptcy court approves it
Call us today to find out if chapter 13 is the right move for you. If it is, we will help you get your case moving and turn the ship of your financial life around.
