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Chapter 13 is an interest-free repayment plan that allows you to combine your
debts and repay all or part of them while protecting you from creditor
harassment. It is an excellent alternative for debtors whose financial problems
cannot be helped by a Chapter 7. It often provides much greater protection to
debtors who own significant assets or have income that would not be exempt in a
Chapter 7. For example, if you own a home and foreclosure is on the horizon, or
the finance company has threatened repossession, a Chapter 13 Bankruptcy filing
will stop them in their tracks and you can then pay off the back balance
gradually. Chapter 13 is also a great option when you have a regular income but
you still find yourself unable to pay all your bills at the end of the month.
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Do I qualify?
In order to qualify for a Chapter 13 Bankruptcy, you will need to meet two
general income requirements. First, you must have a regular source of income.
Second, you must have sufficient disposable income. Put another way, you must
have at least some income left over to distribute to creditors after you
subtract your living expenses from your net monthly income.
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How does it work?
There are specific and complex procedures involved in filing a Chapter 13 plan.
First, your lawyer will need to prepare a detail financial summary of what and
whom you owe, what your assets are, your monthly living expenses and income.
Your attorney must also prepare a comprehensive proposal for repayment. Often a
plan will call for different percentages of repayment for different classes of
creditors. All of the items submitted must be prepared on court approved forms.
Once you file your petition and plan, the court will issue an Automatic Stay
order, barring all creditors from taking any further collections or legal action
against you, including foreclosure or garnishment. The court will set a date for
a hearing. This hearing is called the 'Meeting of Creditors.' You and your
creditors will be notified of the time, date and place of this meeting, and you
will be required to attend this hearing with your attorney and answer questions
under oath about your financial matters.
The trustee appointed in your case will run the meeting. It is the trustee's job
to verify that the financial information you give. The trustee will then decide
whether he can recommend to the judge that your plan be confirmed. At the
meeting, the trustee may question you about your income, expenses, property,
past earnings and the schedule of repayment.
The court will also notify you of the date of the confirmation hearing. At the
confirmation hearing, the judge will determine whether your plan should be
confirmed and allowed to proceed. The creditors may attend this hearing and
offer any objections they may have. Your presence at the confirmation hearing is
often not required. Once your plan is confirmed, you will simply make one
payment a month to the trustee who will make payments to your creditors
according to the schedule set out in the plan. You will start living your life
again.
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What will Chapter 13 do for me?
Many of the benefits derived from a Chapter 13 cannot be obtained through the
filing of a Chapter 7 Bankruptcy. Some of the many benefits that may be reaped
from a Chapter 13 are as follows:
- You can stop a finance company from repossessing your car and make the back
payments over a period of time.
- You can stop foreclosure proceedings against your property and pay off the
back balance gradually. Such an extension is also available on back taxes.
- If your monthly payments on contracts are too large, you may be able to
lower the monthly payment and possibly the interest rate.
- Depending on your circumstances, you may be able to pay the unsecured
creditors far less than 100% of their claims with no interest after the date of
filing.
- In most instances, you can stop any more interest from continuing on
unsecured debts.
- You may be able to keep property that would have otherwise been given to your creditors in a Chapter 7.
- You may be able to stop collection activities against a person who cosigned
a loan for you.
- You might be able to force a creditor to take back its collateral in full
satisfaction of the claim.
- You can end further obligations to creditors whose services you have not
fully received, such as from health clubs, dance studios, correspondence
courses, leases, etc.
- For debts incurred before you filed your bankruptcy petition, no one can
bother you, sue you, garnish your wages, or repossess property without court
approval.
- You may be able to void certain liens against your household goods and
against some other personal items.
- You can sometimes pay extra into the plan to get it paid off sooner.
- If there is a major change of circumstances, you can propose changes to your
plan that would help you complete it.
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How do I get started?
The first step in the process is finding an experienced bankruptcy attorney.
Considering the complexity of Chapter 13 itself and the further complications
offered by the upcoming changes in the bankruptcy laws, you want to find someone
who specializes only in bankruptcy. Because bankruptcy law is based largely on
state law and exemptions, you want to find a lawyer that specializes in your
state.
In contrast to many large volume bankruptcy firms found across the internet and
yellow pages, when you call Pacific Bankruptcy you will not reach a call center
in Chicago or a paralegal in Philadelphia. You will reach an Oregon or
Washington attorney directly. You will most likely reach the attorney who will
be putting your plan together, representing you at your confirmation hearing or
dealing with your creditors.
At Pacific Bankruptcy, we realize that many of our clients need help finding all
their creditors. To that end, we obtain credit reports for our clients at cost.
Finally, while we welcome the opportunity to meet face to face with all our
clients, we know that for many of them, free time is a luxury that they have
long since learned to live without. Understanding this, we've set up systems and
trained attorneys to accommodate the needs of clients who cannot get over to our
offices.
More than anything, we look forward to helping you get a fresh start so that you
can start living your life again. Please contact us now at 1-800-493-1590 to
talk to us about your situation. Alternatively, you can get started by
completing our free case evaluation form.
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