Chapter 13 Bankruptcy

Chapter 13 bankruptcy is a debt consolidation or debt repayment case. A person filing for Chapter 13 bankruptcy protection makes a monthly payment to a Chapter 13 trustee. The trustee collects the monthly payments then distributes those payments to creditors. The Chapter 13 plan includes the monthly payment amount and indicates which creditors will be paid and how much they will be paid. The plan is filed by the debtor with the Bankruptcy Court. After all payments are made under the terms of the plan, the debtor receives a discharge.

Most people file Chapter 13 bankruptcy to protect assets that might not be fully protected in Chapter 7 bankruptcy. The most common reasons people file Chapter 13 are as follows:

Will I be able to keep all of my property?
Generally yes, if you want to. When you file a Chapter 13 case, debts are restructured and paid according to their priority. By doing this you can generally keep all of your property. However, sometimes a debtor may want to surrender a particular asset in order to eliminate the debt or surrender a vehicle, TV or other appliance which does not work or is no longer needed in full or partial satisfaction of a debt.
Who can file a Chapter 13 Bankruptcy?
To be eligible to file bankruptcy, you must live in, had a business or property in the United States. To be eligible to file a bankruptcy in in Georgia you must also have lived in Georgia for the longest period of time over the last 180 days. If you have lived in Georgia for at least 91 or more of the last 180 days this requirement is met. Additionally there are income and debt limits and certain other factors regarding prior cases that were either dismissed or discharged within certain time periods prior to a new filing.
How long will a Chapter 13 Plan last?
Chapter 13 Plans generally last between three (3) to five (5) years. After the plan has been completed the Debtor is discharged of their debts. This is the case providing that all trustee payments have been paid and certain other requirements have been completed.
What are the most common causes of Chapter 13 Bankruptcy?
The most common reasons for consumer bankruptcy are (a) loss of a job or layoffs; (b) divorce, separation or marital problems; (c) illness and large medical expenses; (d) death or disability of a spouse; (e) caring for children, parents or family members; (f) seriously over extended credit; and (g) unexpected expenses.
Can I stop the bill collectors from calling?
As soon as you retain an attorney to represent you with a bankruptcy case you should refer any collection calls to your attorney. Once you tell a creditor that you are represented by a lawyer they should communicate with your lawyer. As soon as your bankruptcy case is filed, official notice will be mailed to all your creditors informing them of the filing and of the bankruptcy stay. There are even ways to protect a co-debtor or cosigners from collection activity while you in an active Chapter 13 case. Make sure you discuss this with your attorney should you desire to protect a cosigner.
I am married; does my spouse also have to file bankruptcy?
No. When only one spouse has debts or only has debts that are not dischargeable there generally is no reason for both to file.
Will I lose my job?
No. The bankruptcy laws prohibit discrimination based upon a debtor filing for protection under the bankruptcy code.
What happens to my real property and other assets?
Once the Chapter 13 bankruptcy is filed, all the property of the debtor at the time of the filing and certain other property to be received in the future, becomes the property of the bankruptcy estate. This means that the bankruptcy trustee will take control of all non-exempt property for purposes of satisfying the creditors. However, once the Chapter 13 Plan is confirmed (approved by the court), control over all of your property, except for future wages, will be returned to you.
Can I keep my home and personal property?
Yes, generally. One of the primary reasons for filing a Chapter 13 case is to keep your home. If you are behind on your house payments, you continue making your current monthly mortgage payments that come due after the bankruptcy filing. Any arrearage or back payments will be paid to the mortgage company by the Chapter 13 trustee from your monthly plan payments.
Can I keep my car after Bankruptcy?
Yes, generally. If your car is used for collateral or as security for a loan, you will pay the creditor an amount at least equal to the value of the car at the time of your Chapter 13 filing. If the loan was incurred within the last 910 days (2 ½ years) the full amount will be paid through the bankruptcy plan. If the car was purchased over 910 days ago only the value of the car needs to be paid. Any amount due over the value of the car will be paid as an unsecured debt. In any either event the interest rate can often time be reduced greatly.
Will Bankruptcy stop a wage garnishment?
Yes, generally. There are exceptions to this however. Usually regular monthly child support and alimony payments and certain restitution payments can continue.
Will Bankruptcy stop a foreclosure?
Yes, generally. A Chapter 13 filing will stop the foreclosure process. However, if you are behind on your house payments, you must continue making your current monthly mortgage payments that come due after the bankruptcy filing. Any arrearage or back payments will be paid to the mortgage company by the Chapter 13 trustee from your monthly plan payments.
Also, if you have had two or more bankruptcy cases dismissed within the last year there is no automatic stay. You will have to obtain permission from the Bankruptcy Court to impose the stay. A foreclosure conducted prior to order imposing the stay will be valid.
Will Bankruptcy stop an eviction action?
No, generally. If an eviction judgment has been entered bankruptcy generally won’t prevent the eviction. Prior to an eviction judgment being entered Chapter 13 will only stop if for a short period.
Will Bankruptcy stop a judgment?
Yes, generally. Most civil proceedings and judgments are stopped by bankruptcy. Most judgment liens can also be avoided either in whole or in part.
Who notifies the creditor and bill collection?
After your bankruptcy is filed, the Bankruptcy Court mails a notice of the filing to all the creditors that you have listed. This notice also informs the creditors of their rights and of their obligation to discontinue most collection efforts.
Do I have to go to court?
Yes, but not technically Court. About 30 to 45 days after your bankruptcy case is filed, you will have to attend an administrative hearing before the Trustee appointed to your case. This hearing is often referred to as the “341 Meeting” or “First Meeting of Creditors.” This hearing is not held by a Judge and generally is not held in a courtroom. At this hearing, the Trustee will verify your identity and ask questions regarding the information you listed in your bankruptcy forms, assets, debts and other matters. After the trustee has completed his questions, your creditors will have an opportunity to ask a few questions generally regarding the location and condition of your property and insurance coverage.
This meeting generally only takes about five (5) minutes and your attorney will be there to represent and prepare you for the hearing. After this hearing you usually don’t need to return to court unless a creditor files a motion, objection or an adversary proceeding.
What happens after I file my Bankruptcy?
You must ensure you make your bankruptcy payments. The first payment will be due 30 days after you file your case and every 30 days thereafter. The Court will also set a date for your 341 meeting, confirmation hearing and deadline for creditors to file claims
Who deals with the creditors and bill collectors during the bankruptcy?
Your attorney and the Chapter 13 Trustee deal with your prepetition creditors on your behalf. You should refer all creditors and bill collectors to your attorney. Once you inform a creditors that you are represented by an attorney they are required to speak with your attorney on your behalf.
What if I forget to list a creditor on my bankruptcy papers?
From time to time a debtor forgets to list a creditor. You can file an amendment to your schedules to include someone you forgot to list. There are time restriction deadlines for amending your schedules to you should discuss omitted creditors with your attorney as soon as possible. As long as the amendment is timely filed then that omitted creditor is added to the bankruptcy.
What happens to my credit rating after a Chapter 13 Bankruptcy?
The answer to this question varies from case to case and depends upon your prior credit history. Any prior credit that has been paid and is in good standing remains that way. Also any secured accounts that you are going to continue paying (car, house, etc.) will continue to show. A bankruptcy can be listed on your credit report for up to 7 years on any discharged account and for up to 10 years as a public record that a bankruptcy case was filed. However, by the time most debtors have filed bankruptcy, their credit rating is already damaged so the bankruptcy can often time improve credit ratings.
How do I re-establish my credit after Bankruptcy?
Once your bankruptcy case is discharged you may be surprised to find that creditors will send you preapproved accounts or otherwise offer to extend credit to you. That is because after a discharge your listed debts are wiped out and you can’t file a new case for a period of time. Creditors know that if they extend credit to you after discharge they are first in line to get paid and that you can’t obtain a new bankruptcy discharge for some time. Remember to continue paying any accounts that you are keeping on time and to pay any new accounts on time. This will help rebuild your credit.
Can some of my debt be discharged without paying it back in full?
In many cases you may be eligible to pay only a portion of your unsecured debt back. The percentage and amount to be paid back is based on your non-exempt assets, total unsecured debt, income and expenses. We will analyze your case and inform of you what your payment and percentage payback will be.
What are the disadvantages of Chapter 13?
You will remain under court supervision for the life of your case, which is usually three to five years. You will not be able to incur new debts or sell assets during this time without Court permission. The monthly bankruptcy plan payments may be deducted directly from your pay check by order of the Court. If your plan payments are not made, the case may be dismissed and your creditors can file a motion with the Court to have their collateral returned. If you are proposing to pay less than 100% of your creditors the Court may also request that your tax refunds be sent to the trustee for distribution to your creditors.