Is Chapter 13 Bankruptcy My Best Option?
Chapter 13 remains an option for individuals, couples, and sole proprietors (not corporations) who are struggling financially. With the changes to the Bankruptcy Code made in 2005, many people have been required to seek relief by filing bankruptcy under Chapter 13 rather than Chapter 7. When the debtor’s income exceeds the state’s median income, he or she may not be eligible to file Chapter 7 because the law determines that the person has enough funds available to repay a portion of his or her debt.
Those people that are considering bankruptcy are subjected to a calculation called “The Means Test” if their current monthly income is higher than the state median for a family of the same size.
NoWorriesBankruptcy.com will “run” the Means Test for you, and if there is too much disposable income remaining in your budget after you have deducted allowable living expenses, you may have to file Chapter 13 Bankruptcy.
How Chapter 13 Bankruptcy Works
The Debtors in a Chapter 13 Bankruptcy enter into a monthly repayment plan that lasts from 3 to 5 years. Monthly payments are a fixed amount derived from a debtor’s “disposable monthly income,” and require a specific calculation that you would want to be performed by an experienced bankruptcy attorney.
Chapter 13 Bankruptcy may often serve to protect families who are on the verge of losing their home to foreclosure or their car to repossession by putting them into a payment plan they can afford.
As with Chapter 7 the moment you file a Chapter 13 Bankruptcy an “automatic stay” goes into effect that protects the debtor, at least temporarily, from any collection efforts. This means you can immediately halt foreclosure or repossessions by filing a Chapter 13 Bankruptcy.
With Chapter 13 Bankruptcy monthly payments are then used to pay off the past due portion of the loan. Stretching out the repayment of a past due amount balance over a 3 to 5-year period with the protection of the “automatic stay” results in reduced stress and a smaller monthly obligation.
Higher-income debtors may file a Chapter 13 Bankruptcy because they are overwhelmed by unsecured debts. Doing so allows them to freeze late fees, penalties, and interest while they slowly pay back part of their debt. At the conclusion of their Chapter 13 payment plan, any balances that remain on unsecured debts are fully discharged. Most often the payments required to be paid with a Chapter 13 plan are substantially smaller than if the debtor made payments to the creditors directly. This is in part because the creditors will not be paid with the contract and/or default rate of interest. Very often unsecured creditors will not be paid any interest. The monthly payments are directed to the trustee of the bankruptcy court over three to five years, and the trustee is responsible for disbursing the funds to the creditors.
Chapter 13 also provides a great opportunity to bring past due mortgage payments current, to pay recent tax debts in full, or to catch up on unpaid child support obligations.
Speak with a knowledgeable bankruptcy attorney for guidance on how Chapter 13 may be available to help you with your financial problems.
Benefits of Chapter 13 Bankruptcy include…
…it stops a foreclosure or repossession immediately and allows you to design a repayment plan you can afford. If you don’t qualify for Chapter 7 Bankruptcy Chapter 13 Bankruptcy allows you to eliminate your debts for a fraction of the balance. Also, certain car loans can be crammed down to fair market value and some 2nd mortgages can be stripped off entirely, thereby saving you thousands of dollars.
You may consider Chapter 13 Bankruptcy if…
…you have a steady income but you are confronted with an imminent foreclosure or repossession. Also, if you earn too much money to qualify for Chapter 7 Bankruptcy but the total of your unsecured debt is so great you can’t possibly pay it off within the next 5 years.
The consequences of Chapter 13 Bankruptcy include…
…3 to 5 years is a long time to be bound to a repayment plan and many of the debtors who file for Chapter 13 Bankruptcy fail to complete their bankruptcy payment plans. Filing for bankruptcy has a negative impact on your credit score. Further, you surrender a great deal of control over your own finances to the Court while you are in an active Chapter 13 Bankruptcy.
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From our clients
“I recently had the good fortune to contact and engage with attorney Dean Feldman regarding a personal legal situation. I know Mr. Feldman has a demanding schedule in his law practice, but he made himself available when I needed him. He took ample time to help me with complicated legal problems. The problems were solved in my favor thanks to his counsel. I am grateful to have found him and it is without reservation that I positively recommend his law office to anyone who needs prompt, efficient, and emphatic legal work.”
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We were extremely satisfied with the services we received from Dean. We are in a very complicated financial situation that we would’ve have to spend lots of money to an attorney to fix. Dean gave us honest reasonable counsel about our situation. He answers his phone every time we have called him. We talked to two other bankruptcy agents before Dean and they were both dishonest and just wanted our money not to help us. But Dean was thorough and put us at ease he didn’t hesitate to let us know what our options are without mentioning payments for himself. If you’re looking for a honest thorough bankruptcy firm Dean at no worries bankruptcy is your bet. We didn’t worry at all talking with Dean. He made us feel safe.
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“This was a difficult time for me, and to go through this process, I was incredibly nervous and stressed. Dean & his team were beyond professional & helpful. Thanks to their intensive efforts, I was able to pass through this experience feeling like I was completely taken care of, with little or no hassle. When having to make this decision, there’s no question – it’s scary, and overwhelming. Yet, they took care of everything in such an efficient way, it made the task seem much less daunting. While I regret having to gain their services, once I did, it truly helped me gather the strength to go through with it. As such, the decision really benefited me, and I feel very grateful to this company for seeing me through, and at an affordable rate, as well.”
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