What Is Chapter 13?
Chapter 13 bankruptcy is a plan that allows wage earners to pay off some or all of their debts over a period of several years. Chapter 13 is filed in the U.S. Bankruptcy Court, where you or your attorney will present a proposed repayment plan for consideration.
The steps in a Chapter 13 case include:
- Taking a required credit counseling course
- Preparing the bankruptcy petition and proposed plan, or having your attorney draft these documents. Prepare additional required documents like tax returns for the past four years
- A trustee is appointed by the court to work with your case.
- The automatic stay goes into effect.
- You begin to make payments (even before the plan has been confirmed).
- Attend a meeting of the creditors
- Attend the final confirmation hearing
- File or object to proofs of claim
- Make payments according to the plan
- Take a financial management class (this is in addition to the credit counseling course that must be taken earlier in the process
- The court grants discharge and closes the case at the end of the repayment period.
How is Chapter 13 Different from Chapter 7?
Chapter 13 is available to people who make too much money under the “means test” to file for Chapter 7. Chapter 7 calls for a total liquidation of assets and allows the discharge of generally all debts. However, people who make enough money to pay some of their debts under Chapter 13 can make a plan do so, in many cases saving their ability to stay in their home. Some of their debts are discharged, while others may be repaid according to a plan.
Are All of my Debts Discharged Under Chapter 13?
In short, no. In chapter 13 cases, some debts are discharged while others may be restructured or placed under a payment plan to allow the debtor to afford to pay them over a time. These plans are often used to repay mortgage or car payments that are past due.
Some types of debts are able to be discharged under Chapter 13 that are not dischargeable under Chapter 7. You can ask your attorney for more information about which debts might qualify.
Is Chapter 13 Right for Me?
Everyone’s financial situation is different, so you need to consult with a qualified bankruptcy attorney to discuss whether Chapter 13 is a good option for you. If you have reason to believe that you make too much money to file Chapter 7, 13 may be a good option.
Call a Salt Lake City Chapter 13 Lawyer Today to Schedule a Free Consultation
The best way to learn more is to contact us at JLT Law to discuss whether Chapter 13 is right for you. The sooner you decide to file Chapter 13, the sooner you can take back control of your financial future. Call us today at (801) 896-9444.