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Guidance Through Chapter 13
There are times when individuals and married couples accumulate significant debt and find it difficult to manage or repay. Many people hesitate to file for Chapter 13 bankruptcy because they are concerned about losing their home, vehicles, or other important assets, as well as the impact on their credit.
Attorney Stephen A. Thomas serves clients in Washington, D.C., Maryland, and Michigan, providing clear guidance and strategic solutions to help you take control of your financial future.
At Stephen A. Thomas, PLLC, you will receive step-by-step guidance through the Chapter 13 bankruptcy process, so you understand your options, the benefits, and how to move forward with confidence.
What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is a type of bankruptcy that allows individuals and married couples to restructure their debt. Like most other types of bankruptcies, the court assigns a trustee to oversee the bankruptcy. In Chapter 13 bankruptcies, trustees receive payments from the debtor and make payments to creditors.
Debt is not immediately discharged, but a three- to five-year repayment plan is set up. After completion of the plan, any remaining debt is discharged unless some disqualifying circumstance exists.
Chapter 13 aims to help people get caught up on secured loans, like mortgages, and resolve most debts. This type of bankruptcy carries certain benefits not available through Chapter 7 bankruptcy and is often referred to as wage earners' bankruptcy because you must have a regular income to qualify.
Eligibility for Chapter 13 Bankruptcy
- Regular income, even if self-employed or operating an unincorporated business
- Filing as an individual or married couple and not as an organization, company, or partnership
- Unsecured and secured debts within the limits in 11 U.S.C. § 109(e), which are subject to change
- No disqualifying prior bankruptcy dismissals within the past 180 days
- Completed credit counseling from an approved credit counseling agency
Common Reasons People File for Chapter 13
- You are behind on mortgage payments, risk foreclosure, and do not want to lose your home
- You are behind on vehicle loan payments and risk repossession
- You are behind on utility payments and risk disconnection
- A creditor has filed a lawsuit, garnished your wages, or implemented a bank freeze
- You have a sole proprietorship and are behind on payments or have accumulated too much debt
Reasons Not to File
You may not want to file for bankruptcy if you think you will not be able to commit to the repayment plan. Chapter 13 bankruptcies have a higher failure rate than Chapter 7 bankruptcies. If you fail, creditors can once again begin seeking payment, garnishing wages, and freezing bank accounts. You may also lose assets you fought to keep, like your home or car.
You should speak to a Chapter 13 bankruptcy attorney to obtain advice on the best debt solution for you. After reviewing your financial situation, a lawyer can also discuss the real chances you have at succeeding with a Chapter 13 bankruptcy.
How Much Does It Cost to File?
The cost to file Chapter 13 bankruptcy depends on whether you file on your own or retain a bankruptcy attorney. Court filing fees are set federally at $313 for Chapter 13, and attorney fees depend on your case. We explain every cost in your free consultation before you commit to anything.
The repayment plan is a cost all on its own; the amount depends on your income, total debt, and type of debt.
Due Diligence Checklist
- List of creditors and the most recent statement for each creditor
- List of cosigners, including names and addresses
- List of real and personal property
- List of monthly living expenses
- Source, amount, and frequency of income
- Most recent tax return and credit reports
- Bank account statements covering the last 12 months
- Divorce decrees and domestic court orders related to debt or support obligations
What Happens When I File?
After you file for bankruptcy, you are given a case number and a Notice of Bankruptcy Case Filing, which you can use to prove to any creditor that you are under the protection of an Automatic Stay. Chapter 13 bankruptcy stays on your credit history for seven years.
- Attend the 341 Meeting of Creditors
- Complete a Financial Management Course and file the certificate before completion of the bankruptcy
- Make timely payments under the payment plan