Are you concerned about how you will pay your bills? Are you experiencing harassment from creditors? Do you feel overwhelmed by your financial situation? If so, you may benefit from seeking bankruptcy. Federal law allows for five different types of bankruptcy. The two most common types of bankruptcy are Chapter 7 bankruptcy or Chapter 13 bankruptcy. Chapter 13 bankruptcies are focused on reorganizing an individual’s finances.
In a Chapter 13 bankruptcy, the debtor must make monthly payments to the bankruptcy trustee. If you have questions about filing for Chapter 13 bankruptcy, we have assembled a list of frequently asked questions. At Bouloukos, Oglesby, & Mitchell Attorneys at Law, we are always available to discuss any other questions you might have. Contact our law firm today to request a free consultation with one of our skilled bankruptcy attorneys.
What are the Qualifications for Filing a Chapter 13 Bankruptcy?
The first step to filing for a Chapter 13 bankruptcy is discovering whether or not you qualify for Chapter 13 bankruptcy. To qualify for a Chapter 13 bankruptcy, your income tax filings must be up-to-date. You will need to submit proof that you have filed all federal and state income tax returns for the last four years prior to your Chapter 13 bankruptcy filing date.
Your debt must be within the amount of limitations set forth in federal statutes. You must also be employed and have enough income to cover the monthly payment that you are required to pay. You must be filing for bankruptcy as an individual, not as a business. You also must have a sufficient amount of disposable income.
How Much Income Must I Have to Qualify for a Chapter 13 Bankruptcy?
In order to qualify for a Chapter 13 bankruptcy, you will need to prove to the bankruptcy court that you make enough income. You will need to prove that you have enough disposable income to meet your debt repayment obligations. You will need to prove that you can meet your debt repayment obligations after taking away your allowable expenses and making your required payments.
Which Payments Constitute Income When Considering a Chapter 13 Bankruptcy?
- Salary or regular wages
- Self-employment income
- Wages from temporary or seasonal work
- Commissions from work or other sales
- Pension payments
- Social security benefits
- Workers’ compensation benefits or disability benefits
- Strike benefits or unemployment benefits
- Public benefits such as welfare payments
- Alimony and child support
- Rent payments and royalties
- Profits from selling property
Will My Spouses’ Income Count in a Chapter 13 Bankruptcy?
If you are married and filing for Chapter 13 bankruptcy, your spouse’s income does not necessarily need to be your income. For example, a spouse who does not work can file along and claim money that a working spouse brings in as income. Indeed, an unemployed spouse can also file for Chapter 13 bankruptcy jointly with a spouse who works and has a regular, qualifying income.
How High can My Debts be When Applying for Chapter 13 Bankruptcy?
Your debts cannot exceed a certain amount to qualify for Chapter 13 bankruptcy. The total amounts of your secured and unsecured debts must fall below a certain amount. Currently, those filing for bankruptcy cannot have more than $1,257,850 of secured debt and $419,275 of unsecured debt. When your debt exceeds the limitation, you may need to file a Chapter 11 bankruptcy case instead of a Chapter 13 bankruptcy. The debt limitations change every three years and will change again in April 2022.
What are the First Steps in a Chapter 13 bankruptcy Process?
First, you must complete your bankruptcy paperwork. Next, you will need to take a pre-filing credit counseling course. After you file for bankruptcy, an automatic stay will begin to take effect. The automatic stay bars most of your creditors from attempting to collect on your debts. The automatic stay will not happen until you file your bankruptcy petition and other official forms.
Next, the bankruptcy court will appoint a trustee to oversee your bankruptcy case. Once a trustee has been appointed, you will receive a Notice of Appointment of Trustee from the court. Next, the court will mail your creditors and you a Notice of Chapter 13 Case. This notice will include the date of the creditor’s meeting and the deadline by which creditors must file their claims. It will also state whether or not you as the debtor has filed a plan yet, and the date of the confirmation hearing.
What Happens After Your Creditors Receive Notice of Your Bankruptcy?
After receiving notice of your bankruptcy, creditors will have the option to file written objections to your plan. You will begin working with your trustee, who will govern your bankruptcy case. You will need to provide your assigned trustee with your tax return and other important documents. The trustee may request several other types of documents, as well. Within 30 days after filing your petition for bankruptcy, you will begin making payments per your repayment plan.
Attending the Meeting of Creditors
Within 40 days of filing for bankruptcy, you will need to attend a meeting of creditors. At this meeting, the trustees and creditors can show up and ask you about information in your bankruptcy paperwork.
How Long do Chapter 13 Bankruptcy Payment Plans Last?
The meeting of creditors takes place within 40 days after filing a bankruptcy petition. At this meeting, you, your creditors, and the trustee will meet. Creditors do not have to attend but can choose to attend. Creditors can raise objections to your plan. Creditors often seek to modify your plan before the confirmation hearing. They will need to file a written objection to the bankruptcy plan to receive a court ruling.
What is a Confirmation Hearing?
The confirmation hearing must take place between 20 and 45 days after the creditor’s meeting unless the bankruptcy court chooses to hold the confirmation hearing sooner. At a confirmation hearing, the court will address certain objections that creditors or trustees raise. Ultimately, the court will decide whether or not to approve or confirm the repayment plan.
When is the Bankruptcy Process Finally Over?
The bankruptcy process is not over until the bankruptcy court grants you a discharge. This typically happens about 36 to 60 months after you file for bankruptcy. However, if you do not complete your plan payments on time, the discharge will happen later.
What is a Hardship Discharge?
In a hardship discharge, the court discharges your debt before you make all of the required payments under your Chapter 13 plan. It is difficult to secure a hardship discharge. You must prove that there is a permanent or serious reason that prevents you from being able to complete the plan, such as a serious illness. You will need to file a motion with the court and meet the following conditions:
- You failed to complete your payments because of circumstances for which you cannot be held accountable
- Your unsecured creditors have already received as much money as they would have received had you filed a Chapter 7 bankruptcy
- A modification of your bankruptcy repayment plan is not feasible
Contact our Experienced Chapter 13 Bankruptcy Lawyers
If you are considering bankruptcy, you probably have serious questions and concerns. The lawyers at Bouloukos, Oglesby, & Mitchell Attorneys at Law can help. After reviewing your situation, we can advise you as to whether you will benefit from a Chapter 13 Bankruptcy. Contact our lawyers as soon as possible to schedule your free consultation and learn how we can help you.