Experienced Bradenton Chapter 13 Bankruptcy Attorney
Chapter 13 is a common alternative for individuals who do not qualify for a Chapter 7. It can, however, be the preferred option even in cases where the individual qualifies for both.
This may be the case if some of your debt does not qualify for discharge in a Chapter 7, which depends on the type of debt you hold. Certain assets are better protected with a Chapter 13, which can be another reason for choosing this option.
Rather than immediately cancelling all qualifying debt, a portion of the debt is paid over time according to a payment plan. This payment plan extends over three to five years and is based on your ability to pay, determined by the means test. At the end of a successful payment plan, all remaining unsecured debt is discharged and you get a "fresh start".
The Benefits of a Chapter 13 Bankruptcy
- A Chapter 13 can include certain tax debts, with no interest charges during the plan.
- If you are behind on your mortgage or are in foreclosure you may be able to save your home. In a Chapter 13, late payments and fees can be caught up over three to five years. It is also possible to modify a mortgage in a Chapter 13 to reduce your payment, interest rate and / or balance owed.
- In a Chapter 13 it is possible to cancel a second mortgage if the house is worth less than what is owed on the first mortgage.
- If you owe significantly more on your car than what it is worth it is possible to reduce the balance of the loan to it's value and /or reduce the interest rate to around 6%.
Frequently Asked Questions (FAQs)
When is it better to choose Chapter 13 bankruptcy rather than Chapter 7 bankruptcy?
- You have enough disposable income to pay all or most of your debts in a reasonable time;
- You have property that you absolutely do not want to lose; or
- Some of your important debts can be discharged only under Chapter 13.
What are the requirements for a Chapter 13 bankruptcy?
You can petition for Chapter 13 bankruptcy if:
- You have significant disposable income;
- Your unsecured debts are under $394,725 and your secured debts are under $1,184,200 (these figures are adjusted upward periodically);
- You are not a corporation or partnership;
- You have not had a bankruptcy petition dismissed during the last 180 days (certain exceptions apply); and
- You received credit counseling from an approved provider during the last 180 days.
If your petition is denied, it might be converted to a Chapter 7 petition, even over your objections.
What kinds of debts cannot be discharged under Chapter 13?
A Chapter 13 discharge will not cover:
- Home mortgages and certain other long-term obligations;
- Child support;
- Certain recent tax obligations;
- Student loan debts;
- Debts arising from the overpayment of government benefits;
- DUI personal injury or wrongful death judgments; or
- Restitution ordered as part of a criminal sentence.
The foregoing list is not necessarily exhaustive.
What is the difference between a secured creditor and an unsecured creditor?
A secured creditor possesses a security interest in some property to secure the debt – the bank that holds the mortgage on your home, for example, or the lender who supplied the purchase money for your vehicle (if you haven't already paid off these debts). If you default on a debt, a secured creditor can sell the property that secures the debt to satisfy it.
An unsecured creditor has no security interest in your property and is generally considered to be in an inferior position to collect the debt (at least compared with a secured creditor). This is because he must wait in line behind secured creditors to receive proceeds from the sale of your assets.
The Holland Law Group has attorneys that can review the specifics of your financial situation and help you to determine the best approach for you.
Dedicated Bankruptcy Assistance
For assistance from seasoned Chapter 13 professionals, talk to the team at the Holland Law Group. Our Bradenton Chapter 13 bankruptcy attorneys have helped many individuals and families escape from under the burden of crushing debt and take the time to understand your personal situation and determine your best course of action. There are many specifics to consider and we can use our extensive experience to help you make informed decisions about your financial future.