Chapter 13 — Providing A Chance To Catch Up And Save Your Home And Vehicle
Suppose you have a regular income but cannot afford to pay all your creditors. In that case, Chapter 13 bankruptcy puts foreclosure, repossessions, and debt collections on hold and provides breathing room, and allows you to pay only that portion of your unsecured debts you can afford over time. Most Chapter 13 cases do not pay all unsecured debt, and some pay nothing to unsecured creditors. Those debts not paid in a Chapter 13 plan are discharged with some exceptions.
As the oldest bankruptcy law firm in Louisiana, we have helped thousands of individuals and families find relief from debt and creditors. Simon Fitzgerald LLC offers a free consultation with no upfront attorney fees.
EXTENSIVE EXPERIENCE IN CHAPTER 13 BANKRUPTCY
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Meet Julie: Chapter 13 Bankruptcy Case Illustration
Julie lives with her disabled mother in an apartment in Monroe. Julie’s hours were cut at her job, and she has been struggling to pay her bills over the past several months, getting further behind. Although Julie kept up with her apartment rent, she is now behind a month, and her landlord threatens her with eviction. This is a frightening proposition for Julie, as she and her mother would have no place to live and no money to try and find another rental. Although Julie had not considered bankruptcy a solution to a potential eviction, a friend referred her to the Chapter 13 bankruptcy attorneys at Simon Fitzgerald LLC.
Once there, Julie’s questions were all answered thoroughly and comprehensively. She found that the automatic stay issued once her bankruptcy petition is filed could stop any eviction actions her landlord is considering, assuming she files for Chapter 13 bankruptcy before the landlord receives an eviction judgment. Understanding the need to act quickly, Julie has a Simon Fitzgerald bankruptcy attorney helping her through the process. Eviction is avoided, and Julie has a Chapter 13 bankruptcy repayment plan that significantly eases her monthly financial burden.
THE MANY ADVANTAGES OF CHAPTER 13
In a Chapter 13 repayment plan, your unsecured debts can, in most cases, be substantially reduced or eliminated. You get instant relief from creditor actions and gradually pay only that portion of your debts you can afford. You will make a fixed monthly payment for a minimum of 36 months up to a maximum of 60 months, based primarily on your ability to pay. At the end of the plan, all remaining dischargeable debt is eliminated. You don’t forfeit any assets except for those you wish to surrender.
The majority of bankruptcy petitions in Louisiana are filed under Chapter 13. Chapter 13 offers immediate and long-term relief and is generally considered a less harsh bankruptcy than Chapter 7. If you do not meet the requirements for filing Chapter 7 bankruptcy, then Chapter 13 bankruptcy might be right for you. Chapter 13 bankruptcy is known as “reorganization” and is for those debtors that can afford to repay at least some of their debts.
If you have a regular job, then your disposable income (the amount you have left over each month after paying for the basics, like housing, utilities, healthcare, and food) is what you must pay toward your monthly debts. The primary benefits of filing for Chapter 13 bankruptcy include:
- You’ll have more time to pay off your debts, and Chapter 13 trustees may be more flexible on the terms of your payments.
- Many of your unsecured debts may be eliminated, or you could pay just pennies on the dollar for those debts.
- If you are behind on your mortgage, you can put those past due payments into your payment plan, preventing foreclosure of your home. You can stop foreclosure and repossession and may even be able to reduce your monthly vehicle payments.
- Repossession of a vehicle may be handled in the same way as potential foreclosure, with the past due vehicle payments being built into your payment plan.
- Wage garnishment can be prevented—creditors will not seize your take-home pay under Chapter 13 bankruptcy.
- You get to keep the property you’re making payments on.
- While a Chapter 13 bankruptcy filing will result in a credit score hit, in most cases, it is no worse—and possibly not as bad—as having late payments, a foreclosure, or a repossession on your credit history.
- Within one to three years after filing for Chapter 13, you can begin rebuilding your credit, potentially with secured credit cards and the judicious use of credit.
- You can get some peace of mind and free yourself from the constant stress of being unable to pay your debts.
What Is the Difference Between Chapter 13 and Chapter 7 Bankruptcy?
The primary difference between filing for Chapter 13 and Chapter 7 bankruptcy is that Chapter 13 allows you to catch up on secured debts—like your home or car—while still being able to discharge some unsecured debts like credit card debt, medical bills, and personal loans. Chapter 7 focuses solidly on discharging unsecured debt. There is no restructuring of debt in Chapter 7 or repayment plan. For more information regarding the differences between Chapter 13 bankruptcy and Chapter 7 bankruptcy, download our free guide.
How Do Chapter 13 Payment Plans Work?
A Chapter 13 bankruptcy will allow you to pay some or all of your debt through a payment plan that will last from 3-5 years. The gist of the process is as follows:
- You must take a court-approved credit counseling class within 180 days of filing for bankruptcy.
- Your attorney will file your petition, accompanied by “schedules” detailing your income, liabilities, assets, and expenses and a list of your creditors.
- The bankruptcy clerk will notify all creditors of your bankruptcy filing.
- Once your petition is filed, automatic stay-on-collection actions will go into effect. This stay prevents creditors from harassing you or taking collection actions against you while your case is pending.
- Within 14 days of filing your Chapter 13 bankruptcy petition, you must file a repayment plan detailing how to repay some or all of your debt. The amount you will pay each month is given to the Chapter 13 trustee, who will distribute the payments to your creditors.
- A meeting will be scheduled between your creditors, your trustee, and yourself within 60 days of when your bankruptcy petition is filed. At this meeting, you may have to answer questions from the trustee regarding your finances and repayment plan.
- Within 45 days from the creditor meeting, a hearing will be held to determine whether your repayment plan will be confirmed.
- You will make regular payments as per your repayment plan until the plan is completed; then, you will receive a discharge; any debts not covered under your repayment plan will be discharged, even if the plan did not provide for them to be paid in full.
Do You Qualify for Chapter 13 Bankruptcy?
In addition to being a resident of Louisiana for at least two years, you must complete a credit counseling course within 180 days before filing for Chapter 13 bankruptcy. If you meet the low-income requirements, you may be able to have the fees for this credit counseling waived. A Chapter 13 bankruptcy filing requires sufficient “regular income” to cover your basic living expenses, your mortgage, and the required payments to the trustee.
“Regular income” includes wages, government benefits, spousal or child support, and other regular income types. In cases where a relative has a “substantial interest” in the success of the Chapter 13 bankruptcy plan, the court could potentially consider that relative’s income. There is also a limit to your debt, although this amount changes every three years. Currently, you are allowed no more than $1.2 million in secured debt (like your mortgage or car loans) and no more than $400,000 in unsecured debt.
What Are Exempt and Non-Exempt Property When Considering Chapter 13 Bankruptcy?
Although state and federal exemptions allow each state to decide whether its residents can choose one or the other, Louisiana is an “opt-out” state, limiting residents to only using Louisiana exemptions—assuming they meet the residency requirements. Only residents that have lived in the state for more than two years can use the Louisiana state exemptions.
If you haven’t lived in the state that long, you will generally use the exemptions from the state you lived in before you moved to LA. Louisiana allows married couples filing jointly to claim a total exemption for most property owned together—except for the homestead exemption. Exemptions are less crucial in a Chapter 13 bankruptcy filing than in a Chapter 7 bankruptcy filing since, under Chapter 13, you are mainly restructuring your debt and presenting a payment plan. It would help if you spoke to your experienced bankruptcy lawyer Simon Fitzgerald to determine how exemptions might apply to your filing.
How Do I Choose the Best Chapter 13 Bankruptcy Lawyer for Me?
Choosing the best Chapter 13 bankruptcy lawyer can seem like a daunting task at a time when you are already anxious and stressed about your financial future. You may consider asking friends, family members, or co-workers for a Chapter 13 bankruptcy lawyer referral.
As the oldest bankruptcy law firm in Louisiana, the attorneys at Simon Fitzgerald can provide everything you need and want in a bankruptcy lawyer. We are trustworthy attorneys who will put you at ease during this difficult time. Our attorneys know bankruptcy law inside and out after helping more than 25,000 people through the bankruptcy process with compassion and skill. Our firm is transparent and will answer all your questions thoroughly, keeping your unique situation and circumstances in mind.
Ready for a Financial Reboot with Chapter 13 Bankruptcy? Simon Fitzgerald LLC is Here to Assist You
Chapter 13 bankruptcy may seem daunting, but our free guide demystifies it. Stay informed with the latest insights by signing up for our newsletter. If Chapter 13 bankruptcy is on your horizon and you need a tailored evaluation of your options, we’re here to support you. Typically, there are no up-front legal fees, as these are encompassed within your Chapter 13 Plan. Only the Court costs of $330.00 are required initially, making the process very accessible to those dealing with immediate financial issues.
Don’t let financial burdens weigh you down. Contact Simon Fitzgerald LLC today and take the decisive step towards financial stability. Our seasoned attorneys are prepared to navigate the Chapter 13 process, empowering you to reclaim your financial destiny. Call us today to arrange your complimentary consultation, or click here to schedule an appointment at one of our various offices across Louisiana: Shreveport / Monroe (318-284-5565), Alexandria (318-526-8551), or Lafayette / Lake Charles (337-486-3732). Let us assist you in forging a new path with Chapter 13 bankruptcy.