Filing chapter 13 bankruptcy will not erase all of your debts, but it will give you the breathing room necessary to reorganize your life. Known as wage earner’s bankruptcy, Chapter 13 is the best choice for those who are behind on payments to creditors but could pay their debts if given time. Since Chapter 13 bankruptcy is complicated, you will need the aid of experienced bankruptcy lawyers who can guide you through the entire process and advise you of your options.
You must reside in Florida for at least 90 days before you can file Chapter 13 bankruptcy in the state. Chapter 13 filing starts with a visit to a bankruptcy attorney. Bring all relevant financial information to your first meeting, including the previous six months’ worth of debts, pay stubs, and bank statements. Once the bankruptcy lawyer reviews your information, the Chapter 13 petition is filed in a federal bankruptcy court in Florida. That means an automatic stay for foreclosure on your home, wage garnishment, motor vehicle repossessions, and the constant harassment by creditors.
Within two weeks of filing the Chapter 13 petition, your bankruptcy lawyer will file a Chapter 13 repayment plan with the bankruptcy trustee. Besides your debts, the repayment plan may also include attorney’s fees – which are typically higher in Chapter 13 than in Chapter 7 bankruptcy because so much more work is involved – along with the administration and trustee fees.
Approximately one month after filing Chapter 13, you and your bankruptcy attorney will meet with either the bankruptcy trustee or their lawyer. This is known as the creditor’s meeting, and it is generally brief. At this meeting, the trustee or their representative lets you know if changes are necessary in your Chapter 13 repayment plan. The need for changes is quite common, so do not panic.
Expect to take a consumer credit counseling course at least six months prior to filing for Chapter 13 bankruptcy, and another credit counseling course once your bankruptcy filing is approved. Your debts are not discharged until the bankruptcy court receives a certificate certifying you have successfully completed the course. Failure to complete the second course means your debts are not discharged, even if the bankruptcy court closes your case. These courses are offered by nonprofit agencies, and the courses must meet approval by the bankruptcy trustee.
You have probably heard lots of stories about people filing bankruptcy who have to give up their motor vehicles. However, those individuals filed Chapter 7 bankruptcy, also known as liquidation bankruptcy. When you file Chapter 13 bankruptcy, you can keep your car and your home as well as other possessions, as long as you remain up-to-date on your repayment plan.
The repayment plan is at the core of Chapter 13 bankruptcy. These payments plans are usually in place for three to five years, and take up all of your disposable income. The bankruptcy trustee must approve the repayment plan.
Your secured debts are consolidated into this repayment plan, so you write one monthly check to the bankruptcy trustee. The trustee then distributes the funds to creditors listed in the plan. A secured debt is one backed by collateral such as your dwelling or motor vehicle. You and your attorney will put together a budget for your unsecured debt, which may include credit card and medical bills. Based on the amount of unsecured debt you can afford to repay, a percentage of unsecured debt is determined for repayment. When the repayment plan ends, any remaining unsecured debt is eradicated.
The three to five years of living under Chapter 13 are not usually not easy, as many changes in your life require the involvement of the bankruptcy court. It goes without saying that this period often brings financial hardship, but keep looking ahead to when your repayment plan is finished and you can start anew. It is expected that some of the changes in your life will affect your repayment plan. A major car repair, employment changes, or medical issues can throw the repayment plan out of whack, but repayment plans can offer some flexibility as the trustee realizes that life happens.
Remember that during Chapter 13, you must remain current on your mortgage, car loans, and the like if these payments are not part of the repayment plan. Some people may decide that it is simpler to sell their house if they have difficulty making mortgage or property tax payments.
There is no sugarcoating the fact that your budget will remain very tight during this period. That probably means no vacations, limited entertainment and restaurant expenses, and foregoing the purchase of any big-ticket items. Holiday celebrations may prove more subdued than in the past. While you can get a second job, keep in mind that the payment plan is related to your income, so additional income could mean a higher payment plan. If a situation occurs changing your ability to repay, your attorney can submit a plan modification to the bankruptcy court.
If you are facing bankruptcy, you need the services of an experienced Florida bankruptcy attorney. Call us today at 386.222.6677 or contact us online for a free consultation to discuss your options and the Chapter 13 procedure. We will represent you from beginning to end of your bankruptcy proceeding.