Purple Law Firm

Bankruptcy Attorneys Lawyers Chattanooga, TN

Answers to your questions about Chapter 13 bankruptcy

What is Chapter 13 bankruptcy?

It is a payment plan approved by the bankruptcy court. You and your lawyer create and prepare the payment plan. The Chapter 13 Plan lets you pay all or part of your debts over time (between 36 and 60 months). Chapter 13 bankruptcy protects you from being sued and having your belongings taken by creditors. Consult a qualified bankruptcy attorney for complete details and legal advice.

How is Chapter 13 different from Chapter 7 bankruptcy?

A Chapter 7 or “full bankruptcy” lets you get rid of (or discharge) debts without paying them. This is also referred to as a "fresh start" bankruptcy.

A Chapter 13 plan allows you to pay all or part of your debts over time. You make payments you can afford.

A bankruptcy lawyer can explain the difference more fully and determined if you qualify or would be best served by a Chapter 7 or Chapter 13 bankruptcy.

Is Chapter 7 or Chapter 13 better?

Your lawyer will tell you what kind of bankruptcy is best for you. In some cases, only a Chapter 7 will work. But in many cases, a Chapter 13 is better. In some cases, you may have to file Chapter 13 instead of Chapter 7.

Do you have property that can be taken away (repossessed), if you don’t pay? Then Chapter 13 usually works better. In most cases, Chapter 13 lets you keep what you bought while you pay for it. It lets you pay your debts at a rate you can afford. In some cases, you can have lower payments or pay less than the full debt.

With a Chapter 13 bankruptcy you make one payment each pay period or each month. This way you pay all or part of your debts. While you pay, your creditors can’t take your property or your pay check.

Be sure to consult with an attorney who is experienced with bankruptcy.

Who can file a Chapter 13 Plan?

Most anyone with enough regular income to pay basic living expenses plus Chapter 13 payments. Your income doesn’t have to come from a job.

Basic living expenses are

rent, food, lights, heating and cooling, insurance, clothing and transportation. Try adding up these costs. Don’t count your monthly payments to creditors. See if you would have money left each month for a Chapter 13 Plan.

You need a bankruptcy lawyer to tell you if Chapter 13 will work for you.

Can I keep what I put up as collateral (security) on a loan?

In most cases, yes. Ask your lawyer how it will work in your case.

What happens when you file a Chapter 13?

You must give your attorney a list of ALL your debts. You must also give your lawyer a list of everything you own. You must tell your attorney everything about your money situation. A bankruptcy attorney will tell you about the two kinds of bankruptcy, Chapter 7 and Chapter 13.

Before you file a Chapter 13, you and your lawyer work out a payment plan. The attorney prepares your Chapter 13 papers (the petition and other papers).

You read and sign the bankruptcy petition and Chapter 13 Plan. You must swear under oath and penalties of perjury that as far as you know the information is correct. Failure to disclose all information to the bankruptcy court could be a criminal offense.

Your lawyer files the petition with the court.

The court notifies every creditor listed in your petition that you have filed a Chapter 13 bankruptcy. The Court also notifies them when to come to the creditors’ meeting.

You and your attorney must attend the creditors’ meeting. There, the Chapter 13 trustee will ask you questions. This is to make sure your petition is complete and correct. Your creditors may also ask about your debts and what you own.

If the court approves your payment plan, you make payments to the Trustee. The Trustee makes sure the money goes to your creditors each month. Usually the payments are taken out of your pay check and sent to the Trustee.

You must make all your Chapter 13 payments in full and on time. If you miss a payment, the Trustee may ask the court to dismiss your case. If that happens, the court can’t protect your property from creditors, and no debt will be discharged or reduced.

Can I be sued after filing a Chapter 13?

While you are making payments, creditors can’t sue you or take (garnish) your paycheck. They can’t take your property or your home without the Court’s OK.

What about when you finish all of your plan payments? You should not be sued by anyone you paid through the plan. This is true except for a few creditors. Your attorney will tell you about those.

How often can I file a Chapter 13?

After you file a Chapter 13, you can’t file another one for 2 years. If you file a Chapter 7, you can’t file a Chapter 13 for 4 years. Talk to an experienced bankruptcy attorney if you need to file Chapter 13 sooner. There will be problems to work out.

Should my husband or wife also file Chapter 13?

Not always. An attorney needs to review your circumstances and help you make that decision. However, even if your spouse does not file, his/her income must be included in the petition,

Contact Purple Law Firm today!

How much would my Chapter 13 payments be?

It depends on:

1. How much you owe

2. How long the Plan will last, and

3. How much you can pay each month. You and your lawyer together come up with an amount that works for you.

Get answers to your questions, contact an attorney

What if I’m behind on my rent?

You may be able to stop an eviction with a Chapter 13. It works very well if you live in Section 8 or public housing.

You pay your back rent in your Chapter 13 payments. This may work even if you broke the lease. If you are being evicted, tell your lawyer right away.

Contact a bankruptcy attorney

Is Chapter 13 the best way to stop bill collectors from bothering me?

Not always. There are other ways to stop bill collectors who bother you. Collectors Bugging You?.

You may be able to set up a payment plan through a credit counseling company. Creditors don’t have to agree to a payment plan from a counseling agency. But many creditors will agree. You may be able to stop or lower interest while you make payments.

A “Slow Pay Motion” can help if you are sued over just one or two debts. This lets you make small payments and stops garnishment of your paycheck.

Consult with an experienced bankruptcy attorney.

Can I get credit after I finish my Chapter 13 Plan?

Maybe. A bankruptcy doesn’t make your credit look better. Some creditors will say you are a bad risk and won’t give you credit. Others will be glad to give you credit but will charge you high interest.

Will I lose my home if I file Chapter 13?

Not if your Chapter 13 Plan includes house payments and any back payments. Many people file Chapter 13 to keep their homes.

Can I list debts in my Chapter 13 that I have already been sued on?

Yes, you must list ALL your debts. You can’t pick just the debts you want to pay. Filing Chapter 13 will prevent a garnishment or levy of your bank account. Also, in most cases there will be no post judgment interest on such a debt in chapter 13.

What if my car was repossessed?

If they haven’t sold it yet, a Chapter 13 Plan may help get it back. But, you must have enough income to pay for your car in your Chapter 13 Plan. And you will have to keep insurance on the car. If you don’t, you may have to give up the car.

What happens to my credit rating after I file a Chapter 13?

That depends. If you need a Chapter 13, you probably have a poor credit rating already. When you finish your Chapter 13 plan, tell the credit bureau. Ask that your credit report show that you paid off your Chapter 13 plan. What if you want to go into new debts while you are in Chapter 13? The court has to OK it first.

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