At the Johnson Law Firm, P.A., we represent individuals and married couples in Chapter 13 bankruptcy matters. We take the time to explain how Chapter 13 works, and how it can help you take control of your financial situation, save your home from foreclosure, or stop creditors from repossessing your motor vehicles. To find out if Chapter 13 is right for you, take our free online evaluation or call (904) 652-2400 to schedule a free consultation.
Chapter 13 is similar to Chapter 7 in that you file a petition, schedules, and statement of financial affairs with the court. The key differences are the additional filing of the plan and that you have both, “Regular Income” and disposable income to fund the plan. Regular income is a term of art and can include sources of funds other than wages. Generally, you deduct your necessary monthly expenses from your net monthly income to arrive at your disposable income. Your disposable income is then paid to the Chapter 13 Trustee for a period of time (typically three to five years). The Chapter 13 Trustee, in turn, pays your creditors.
Unlike Chapter 7, Chapter 13 allows you to keep all of your property provided you pay the unexempt amount of equity in such property over the life of the plan to your unsecured creditors. Information on the allowable amounts of equity in property can be found on the the Chapter 7 page.
While you are making payments under the plan, creditors are prohibited from starting or maintaining collection efforts against you. Upon completion of the plan, the court issues your discharge and you are relieved from paying the remaining balance of most of your debts.
On the other hand, if the sum of your income from the six months preceding the filing of the Bankruptcy averages out to be greater than the state median, the plan may need to be five years. There are some cases where even if your income from the six months preceding the filing of the Bankruptcy averages out to be more than the state median, the plan can be for less than five years.
Regardless of the income received during the six months preceding the filing of the case, the length of your plan may also need to be longer than three years depending on the amount of non-exempt equity in your real or personal property (as explained above).
These are just a few of the factors that go into determining the length of your plan. We recommend that you speak with the attorney to determine the applicable plan length.
However, some secured debts and all priority debts (e.g. delinquent taxes, and domestic support obligations) must be paid in full over the life of the plan. Determining which debts can be modified and to what extent is complicated so we recommend that you consult with the attorney to determine whether Chapter 13 is right for you.
To find out if you qualify for Chapter 13, take our free online evaluation or call (904) 652-2400 to schedule a free consultation. We also assist clients with filing bankruptcy under the Chapter 7 bankruptcy laws.
The hiring of a lawyer is an important decision that should not be based solely on advertisements. Before you decide, ask us to send you free written information about our qualifications and experience.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.