Chapter 13 bankruptcy is nothing more than a readjustment of your debts, which basically forces creditors to accept new terms of repayment. Chapter 13 bankruptcy requires debtors to fully or partially repay creditors over a period of up to five years. Interest charges normally still apply to the debt, but at less than the original terms of the debt when it was originated.
Usually for Chapter 13 you must have steady income and your total debts will be limited to a combined amount of secured and unsecured debt. You must have unsecured debts at no more than $307,675 and no more than $922,975 in secured debts. If your income is too irregular and your employment seasonal, more than likely you will not be allowed to file under this chapter for it will not guarantee that you can make your payments.
Filing Chapter 13
To file under chapter 13 you must also take credit counseling courses prior to filing and before your case is discharged.The court fees for filing under this chapter are $235 and an additional $39 for administrative fees.
In this chapter, you will be able to establish a payment plan. You must provide a detailed plan for repayment for the now rearranged debt. In this plan you will have “priority debts” outlined, these debts will be tax obligations, child support, alimony and if you employ workers, their wages will be also considered a priority
Unsecured debts must be included in this plan even though they will not be at the highest priority. In other words, after you have made monthly payments to all your priority debts any remaining monthly income must be proceeded as payment to unsecured debts. No debts are discharged under this chapter.
A Confirmation Hearing is normally required in all chapter 13 files and requires you to appear in Court. The court will expect you to have amounts and terms of payments submitted for confirmation in writing. After the 5 years are up however the creditor will have the right to collect all the debt at once if you default again and/or repossess your property, at this point you will have no more protection from the court.
Under chapter 13 you’ll have some advantages, such as you’ll have the opportunity to save your home from foreclosure. You’ll have the chance to catch up on delinquent mortgage payments, and as long you ARE making payments, your bank can’t threaten to repossess. Other secured debts (other than real estate) can also be extended for the life of the repayment period (5 years max).
So chapter 13 basically provides a temporary shield of protection for you in which you still make payments but under new terms. there are provisions under this chapter that can also protect third-parties involved. If you have a co-signer on a loan, that person may also be eligible for this protection without having to file. It’s best to contact a professional for more information on this provision.
In Chapter 13 bankruptcy, once your debts are repaid, they will be reflected in your credit report as paid off. Chapter 7 cases are different, since there’s no repayment schedule during of after discharge your credit report will be hit with late payments and defaults.
Any debts discharged should be labeled “Included in Bankruptcy”, but since you got off the hook from the debt, the last thing a creditor is going to do you is a favor, but still you must try and get those entries corrected, by using the dispute resolution at any of the three credit bureaus. Even under chapter 13, you must keep up with changes to your credit report and make sure that your paid off debts show up as such.
If you are going to file Chapter 13 then it is best to file with a bankruptcy attorney. Having a good lawyer like Ryan E. Simpson of BNKUT can make the process much easier. Furthermore, a good bankruptcy attorney will help you rebuild your credit and start fresh. You can learn more at http://markalexander.over-blog.com. He is one of the best bankruptcy attorneys in West Jordan, Utah.