Chapter 13 bankruptcy filing procedures and proceedings can be complex. Unlike Chapter 7 bankruptcy, which allows you to discharge some of your debts in exchange for the sale of your non-exempt property to repay creditors, Chapter 13 bankruptcy enables you to retain your property and assets while you reorganize your debts. With the approval of the creditors and the court, you develop a manageable repayment plan, in which you repay your creditors in three to five years by making monthly payments to the court. This allows for incremental payments to your creditors over a specified time period. But if you miss one payment, your Chapter 13 case will be dismissed. A seasoned Loveland bankruptcy attorney can review and evaluate your case, explore what options will work best for you, and assist you throughout the bankruptcy proceedings.
To qualify for Chapter 13 bankruptcy, you must meet several requirements, such as:
- You are an individual or jointly file as husband and wife.
- You did not previously discharge your debt under Chapter 13 bankruptcy within the last two years or in a Chapter 7 bankruptcy within the last four years.
- Within the last 180 days, you do not have a prior dismissed bankruptcy case due to:
- Willful failure to appear before the court or comply with a court order; or,
- Request for a dismissal after a creditor requested the court to life an automatic stay.
- You fulfill the credit counseling requirement at least 180 days before filing for Chapter 13 bankruptcy.
- You are current on your state and federal income tax returns for the past four years.
- As of April 1, 2016, your total debts must be less than:
- $1,184,200.00 of secured debt
- $394,725.00 of unsecured debt
These limits change every three years to take inflation into consideration.
A knowledgeable Loveland bankruptcy attorney can help you determine whether you qualify for Chapter 13 bankruptcy.
Secured Versus Unsecured Debt
A secured debt is a debt where you place an asset as collateral, such as a home or car, to guarantee payment of that debt. If you default, then the creditor can legally seize the collateral asset. For example, if you default on your mortgage, the bank can foreclose on your home.
Unsecured debt is “lower priority” debt that is not guaranteed by an asset or property, such as unpaid medical or credit card bills.
A Loveland bankruptcy attorney can review your loans and other debts and educate you regarding your secured and unsecured debts and how a Chapter 13 bankruptcy would affect these debts.
Proposing a Payment Plan Under Chapter 13
You must submit a proposed payment plan. This will be effective for three to five years once you, your creditors and the court accept the plan. However, your plan could be rejected by either or both your creditors and the court. In determining your monthly payments, the following factors will be considered:
- Monthly income
- Amount of secured debts you will continue to pay off
- Amount of non-exempt assets you must re-purchase over the payment plan time period
- Total amount of debt owed to your creditors
- Total amount of debt your creditors would be able to collect in a Chapter 7 bankruptcy proceeding
A skilled Loveland bankruptcy attorney can assist you with preparing a suitable payment plan proposal.
Advantages of Declaring Chapter 13 Bankruptcy
There are many legal benefits to file for Chapter 13 bankruptcy rather than Chapter 7 bankruptcy. The biggest benefits include:
- Keeping your home while giving you time to repay any arrears owed to your mortgage company.
- Availability of mortgage modification mediation programs.
- Interests are tolled on specific debts, like back taxes and student loans, while your case is pending.
- Paying off your debts based on an approved payment plan.
- Under certain instances, your unsecured liens could be reduced or eliminated.
- You have more time to catch up on your payments or to pay off your debts.
- You can retain all of your property and assets.
- In certain instances, your principal loan balance could be reduced to the actual market value or asset securing value, like when your debt is more than the actual worth of your asset.
A Loveland bankruptcy attorney can compared your options to help you decide whether filing for Chapter 13 bankruptcy is right for you.
Contact a Loveland Bankruptcy Attorney
Being aware of all of your legal options will help you make a fully informed decision as to the chapter of bankruptcy that is best for you. A seasoned Loveland bankruptcy attorney from Holland Law Office can evaluate your case, educate you on your options and aid you throughout your bankruptcy proceeding. If you are contemplating filing for bankruptcy in Northern Colorado, call a Loveland bankruptcy attorney with Holland Law Office at 308-241-0474 today.