Thinking About Filing Chapter 13 Bankruptcy?
The automatic stay” is a powerful option under the chapter 13 bankruptcy rules! If you are considering filing a chapter 13 bankruptcy, then you’re probably looking for answers to a few simple questions like, “Do I qualify to file bankruptcy?” or “Does my spouse have to file?” or “Will filing for bankruptcy stop debt collectors from harassing me?” or “How soon can I file and how much will it cost?”
If you’re like me, you probably can’t afford to pay attorney consultation fees just to get the answers you need. That’s why this site is free! I want to help you make an informed decision. I always recommend consulting a bankruptcy attorney before deciding what to do!
Although I’ve provided a wealth of FREE information that will answer most of your questions, let me be perfectly clear here; filing bankruptcy should be your last resort
You always have the option to file yourself or hire an attorney but BEFORE deciding, arm yourself with as much information as possible. It’s especially important to know the difference between Chapter 7 and 13 bankruptcy because they offer very different forms of protection.
What is Bankruptcy?
There are two types of consumer bankruptcy. Each is intended to help consumers in financial crisis, but the solutions offered are very different. Chapter 7 bankruptcy, or liquidation, is more common. A Chapter 7 bankruptcy can eliminate a lot of unsecured debt (credit cards, medical bills, old utility bills, unsecured personal loans, etc.), and can generally be completed within just a few months. In a Chapter 7 bankruptcy case, the trustee can liquidate (sell) non-exempt assets to pay creditors, but most people who file for Chapter 7 bankruptcy don’t have any non-exempt assets, and so are able to keep their property while eliminating unsecured debts.
Bankruptcy Forms B22A is an official bankruptcy form called “Statement of Current Monthly Income and Calculations” which most individual debtors filing for bankruptcy relief will be required to complete beginning October 17, 2005.
Bankruptcy Form B22A is the form most chapter 7 debtors will complete for “means testing” purposes!
Form B22C is the form most chapter 13 debtors will complete. [The Official Bankruptcy Forms can be found on the New and Revised Official Forms page on the Administrative Office of the U.S. Courts Web site.] A debtor must enter income and expense information onto the appropriate form and then make calculations using the entered information. Some of the information needed to complete the forms comes from the Census Bureau and the Internal Revenue Service (IRS). On this Web site, this external data has been reproduced in a format that is designed for ease of use in completing these bankruptcy forms. The source data is also available directly from the IRS and Census Bureau using the links at the bottom of this page.
If you are experiencing any or all of the above, then filing bankruptcy chapter 13 may be your best alternative!
In 2005, The Bankruptcy Reform Bill was passed and dramatically changed the consumer bankruptcy laws. However, it’s still possible to file for bankruptcy and most people are eligible for relief under the new bankruptcy laws. The new laws are considerably more complex and it’s wise to consult with a qualified bankruptcy attorney to see if you qualify.
Wondering if Chapter 13 bankruptcy is right for you?
- If you have credit card or other debts and are unable to make the payments!
- If you are making minimum payments but your balance never seems to go down!
- If creditors and debt collectors are calling demanding payments!
- If debt collectors are demanding more money than you can afford!
- If you have a pending foreclosure, wage garnishment or other lawsuit!
Chapter 13 bankruptcy and Chapter 7 bankruptcy offer different forms of protection.
If you’re facing a financial crisis, a local bankruptcy attorney can help you determine which bankruptcy chapter is the right answer for you. Chapter 13 bankruptcy is often the solution of choice for people who have a lot of secured debt, such as car loans and mortgages, and want to keep the property that serves as security for the loans. In a Chapter 13 case, the debtor enters into a repayment plan that allows 3-5 years to catch up on past due payments.
Generally speaking, Chapter 7 bankruptcy is intended to wipe the slate clean by discharging unsecured debt-debts like credit card debt, medical bills, and unsecured loans. (See File Chapter 7 bankruptcy information)
Chapter 13 bankruptcy, on the other hand, is intended to give a debtor time to catch up past due payments over a period of 3-5 years, while keeping secured property like houses and cars.
What is Chapter 13 bankruptcy?
Chapter 13 bankruptcy is basically a repayment plan that you submit to the bankruptcy court that says you intend to pay off your debts, over a 3 – 5 year period, for as little as 10 cents on the dollar.
Chapter 13 Bankruptcy is designed to give people a fresh start! This chapter of the bankruptcy code was specifically written for individuals who desire to pay their debts but, due to a loss of job, disability, personal crisis and so forth, can no longer afford to make their regular monthly payments and need relief from the high interest rates, late fees and penalties piling up each month
How does it work? What do I have to do?
- Gather the required information: creditor’s names, addresses and amount of debt, source, amount, and frequency of your income, list of all your property; and detailed list of your monthly living expenses
- Fill out the bankruptcy forms and paperwork (AKA case file or bankruptcy petition)
- File your bankruptcy repayment plan petition with the nearest federal court bankruptcy court locations
- Once your chapter 13 bankruptcy paperwork is filed, the court will issue an “automatic stay” stopping all collections and creditors cannot initiate or continue any lawsuits, wage garnishment, or even telephone calls demanding payments!
- Attend the 341 meeting where any problems or concerns with your plan is worked out
- After the meeting a bankruptcy judge officially approves your plan
- Begin making payments within 30 days and continue until completed (up to 36 months)
- After completing all payments, you’ll receive a discharge (legal document releasing you your debts)
How much will filing a chapter 13 bankruptcy cost me?
Currently, the courts are required to charge a $155 case filing fee and a $39 miscellaneous administrative fee for a total of $194 and with the court’s permission, you may pay this amount in four installments over a 120 day period. Note: If a joint petition is filed, only one filing fee and one administrative fee are charged.
Additional costs depend on how you choose to prepare your bankruptcy case file.
Prepare Your Own Case File:
Download the free forms here, fill them out and then file your own petition.
Your only cost is the filing and administrative fees ($194).
Purchase bankruptcy software that runs from just a few dollars for a cheap program to several hundred dollars. You’ll need to learn how to use the software before you can fill in and print your petition. They can be complicated to use.
Hire an Attorney: This is your best option if you have a lot of assets and/or complicated matters. Bankruptcy lawyers are expensive costing $800 to $4000 or more to prepare your case file and to represent you in court. But, well worth the expense if you have assets to protect,
Chapter 13 Bankruptcy is specifically designed for individuals who desire to pay their debts but, due to a loss of job, disability, personal crisis, etc., they can no longer afford their monthly payments so they need relief from the high interest rates, late fees and penalties that chapter 13 can provide.
Chapter 13 bankruptcy background
Chapter 13 is designed for individuals with regular income who desire to pay their debts but are currently unable to do so.
The purpose of chapter 13 is to enable financially distressed individuals, under court supervision and protection, propose and carry out a repayment plan to creditors over an extended period of time.
Under chapter 13, you are permitted to repay creditors, in full or in part, in installments over a three-year period, during which time creditors are prohibited from starting or continuing collection efforts. You may request, “for cause” the court to approve a plan for more than three but no more than five years.
Any individual, even if self-employed or operating an unincorporated business, is eligible for chapter 13 relief as long as the individual’s unsecured debts are less than $290,525 and secured debts are less than $871,550. 11 U.S.C. § 109(e). A corporation or partnership may not be a chapter 13 debtor.
Chapter 13 is not available to a corporation or partnership. Also, you cannot file under chapter 13, or any other chapter if, during the preceding 180 days, a prior bankruptcy petition was dismissed due to your willful failure to appear before the court or comply with orders of the court or was voluntarily dismissed after creditors sought relief from the bankruptcy court to recover property upon which they hold liens.
Chapter 13 – General Notes
- Section 507 sets forth nine categories of unsecured claims which Congress has, for public policy reasons, given priority of distribution over other unsecured claims.
- Unsecured debts are generally defined as those for which the extension of credit was based purely upon an evaluation by the creditor of your ability to pay. In contrast, secured debts are those for which the extension of credit was based upon not only the creditor’s evaluation of your ability to pay, but upon the creditor’s right to seize pledged property on default.
- Bankruptcy Administrators, rather than U.S. trustees, serve in the judicial districts in the states of Alabama and North Carolina.