What Is Chapter 13 Bankruptcy?
A Chapter 13 bankruptcy, also known as a “wage earner’s” plan, may be a good option if you’ve been struggling with your finances, and need a little extra time. Too much debt can be overwhelming, and so can the thought of filing for bankruptcy, but a knowledgeable attorney can help ease your mind and provide you with a roadmap for your future financial success. Chapter 13 bankruptcy allows you to make payments from your disposable income under a court approved plan over three to five years.
When we meet, we’ll discuss your bankruptcy options, which often depend on the type and amount of your debt, your income, and any property you’d like to keep. The means test will also help aid in our decision. Depending on these factors, a Chapter 13 bankruptcy might be your best alternative.
What is a Chapter 13 Bankruptcy?
A Chapter 13 bankruptcy is designed to help people who are able to make a regular, monthly payment toward their debts. A Chapter 13 bankruptcy almost always allows you to keep all of your property as you make payments through a Chapter 13 trustee. Many people end up paying back just a portion of their overall debt during that time, but the remaining dischargeable debt goes away forever after the payment period is over.
When we file your case, we’ll propose a repayment plan for approval by the court. You’ll need to have enough income to show that you can keep up with your proposed plan payments, and stay current with any payments you are proposing to pay outside the Chapter 13 plan. Some debts must be paid in full during the course of the bankruptcy, such as back taxes. You’ll also need to make your regular payments on your secured debts to the Chapter 13 trustee, but mortgage creditors can be paid outside the Chapter 13 plan so long as you are current when you file. Otherwise, any secured debt payments and arrearages must be paid through the Chapter 13 plan. After accounting for your plan payments and basic living expenses, any remaining income must be equally distributed among your other creditors for payment of your unsecured debts. This could include debts for medical bills, credit cards, utilities, and personal loans without collateral. Depending on your situation, you could end up paying very little or nothing at all toward these debts.
Before we file your case, we’ll meet to discuss the requirements and your responsibilities. You’ll need to provide documentation for all of your finances in order to give the bankruptcy trustee an accurate picture of your situation. You’ll also need to complete an online credit-counseling course. Finally, when we file, we’ll propose your repayment plan to the court and to your creditors. Often, the plan is confirmed by the court with little or no opposition. Once the plan is confirmed, you typically make only a single monthly payment to the Chapter 13 trustee. After you’ve completed the terms of the plan, you will emerge from bankruptcy current on your secured debts, all priority debt will be repaid, and most types of unsecured debts will be discharged.
The Right Choice
If you’re being held back by your debt but aren’t sure if bankruptcy is right for you because you have substantial income and assets, you may want to consider filing a Chapter 13 bankruptcy. Bottom line: After working through the Chapter 13 process, you will have put your debt behind you while keeping the property you’ve worked diligently to acquire.
About Davidson Backman Medeiros PLLC
Davidson Backman Medeiros PLLC helps individuals file for bankruptcy under Chapter 7 and Chapter 13 in Spokane, Seattle, and throughout Washington and Idaho. Davidson Backman Medeiros PLLC is a debt relief agency under federal law. We’d appreciate hearing from you with your comments and suggestions.