Chapter 13 bankruptcy allows people with regular income to present a plan to pay all or a portion of their debt. A repayment plan is proposed wherein the debtor will make monthly installment payments to a Chapter 13 Trustee who in turn will distribute a portion of each payment to the various creditors. The plans range from 3-5 years in time. The length of the plan will be determined by the income of the person filing. During this time period, the law forbids creditors from commencing to continuing collection lawsuits or other means of collecting debts.
We help people in Ogden, Layton, Bountiful, Salt Lake and all the surrounding areas file for and obtain needed relief through Chapter 13 bankruptcy. For more specific information regarding Chapter 13 bankruptcy see the links below:
Filing for Chapter 13 offers many advantages over filing a Chapter 7 bankruptcy, otherwise known as a liquidation bankruptcy. Maybe the most obvious and important to many people is that you can stop a foreclosure on your home and pay back your delinquency or the amount you are behind over time, and not in one lump sum. This means that you must start making your normal house payment, but the back portion will be paid over time.
Another benefit of Chapter 13 is that it lets you reschedule your debt (your mortgage for you primary residence is not included in this) and extend them for the life of your Chapter 13 plan. This may lower your payments. Chapter 13 can protect co-signers and co-makers.
Also, for individuals you owe back taxes, Chapter 13 offers a great way of dealing with what is owed. Once you file, the fees and interest stop accruing. Many people use Chapter 13 when dealing with tax issues.
A great way to think about Chapter 13 is thinking about it kind of like a consolidation loan. In Chapter 13 you make one payment each month to the Chapter 13 Trustee, he then takes that money and pays your creditors the portion of money they are owed through your repayment plan. You will have no direct contact with your creditors throughout the plan. In Chapter 13, in most cases, you end up paying only pennies on dollar. Chapter 13 Bankruptcy is looked at differently by many credit institutions and some employers.
The Chapter 13 case begins by filing a petition (individually or jointly with your spouse) with the bankruptcy court. Included with the petition are: schedules of assets and liabilities; schedules of current income and expenses; schedule of unexpired leases and executory contracts (things like cable TV, cell phones, etc.); and a statement of financial affairs. Also, the certificate showing your have participated in credit counseling is also required when filing along with your last 60 days pay stubs and last years filed tax return.
The Chapter 13 plan payment which you are proposing is also included when you file. Remember, this plan sets out how you plan to pay back the debts you owe and how much each creditor will get. A Chapter 13 Trustee will administer the case, he/she sits between you and the creditors. The Trustee will collect your monthly plan payment and distribute a portion off each payment to the creditors you are owed money under your plan. For example, if you are behind on your home or car payment, the arrearage, or portion you are behind, will be paid back over time. You will be in your plan for 3-5 years depending, the length of your plan depends upon your income and what you are trying to accomplish. However, the plan will be for at least 3 years and no longer than 5.
Besides the monthly trustee payments, you need to expect to contribute your tax refund for three years to your plan. Generally you are aloud to keep the first $2,000 of the refund and the rest will be required to given to the trustee. During the time of your plan, you are protected by the "automatic stay", which acts as a barrier between you and pre-petition creditors, they are not permitted to contact you or take any action against you.
Once your plan payments are complete and you take another credit counseling class you will receive a discharge from all your debts. (They are wiped out!)
Richards & Godfrey, PC has been helping people file for Chapter 13 bankruptcy for over 25 years. We offer a Free Consultation to review your case and help you understand how Chapter 13 can help you. Call 801-621-7443 or email us at office@richardsgodfrey.com or just submit via the Contact US link above.
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