Chapter 13

What is Chapter 13 Bankruptcy?

Chapter 13, Title 11, United States Code, more commonly known as Chapter 13 Bankruptcy, allows individuals and small businesses to undergo a financial reorganization supervised by a federal bankruptcy court. It is a form of debt consolidation in which the debtor repays creditors either in full or in part. In most cases, a Chapter 13 Bankruptcy lowers the amount paid on debts into a manageable monthly payment. A Chapter 13 Bankruptcy can also, most often, stop collection efforts and provide relief from law suits, repossessions, foreclosures and tax levies.

How does Chapter 13 Bankruptcy work?

A Chapter 13 Bankruptcy begins with the filing of a petition with the bankruptcy court. In addition, a schedule of assets and liabilities, a schedule of current income and expenditures, and a statement of financial affairs must also be filed. The filing of the petition automatically stays most actions against the debtor or the debtor’s property. As long as the stay remains in effect, creditors generally can neither initiate nor continue any lawsuits, wage garnishments, foreclosures or repossessions.

At the time of filing a Chapter 13 petition, a bankruptcy court-appointed trustee will be assigned to the case. In addition to the petition and the above mentioned schedules, the debtor must also file a payment plan. This usually must be done within 15 days from the filing date. It is the Chapter 13 trustee’s role to collect plan payments from the debtor and in turn make payments to creditors. The debtor is usually given 30 days from the filing date to begin making payments. The plan provides for monthly payments of a fixed amount stretching out over a three- to five-year period and must be confirmed by the court. In some cases a payment plan may offer unsecured creditors less than full payment of their claims.

Approximately 30 days after a Chapter 13 Bankruptcy petition is filed, a Meeting of Creditors is held and the debtor is examined under oath. This meeting is conducted by the trustee. Creditors may attend and are permitted to ask questions. Debtors must attend. If a husband and wife filed jointly, they both must be present. If the plan is confirmed by the bankruptcy judge, the Chapter 13 trustee begins distributing the funds received according to the debtor’s plan. If the plan is not confirmed, the debtor may then attempt to amend the plan. At any time, if the debtor wishes, he or she has a right to convert the case to a Chapter 7 Bankruptcy. In a Chapter 7 Bankruptcy the debtor does not set up a payment plan. In lieu of a payment plan the debtor’s non-exempt assets are liquidated and the proceeds distributed to unsecured creditors.

A Chapter 13 Bankruptcy is not designed to solve financial problems which arise after the case is filed. The debtor is required to make regular payments to the trustee according to the court-confirmed payment plan. This often requires the debtor to live on a fixed budget for a period of years. Upon successful completion of all payments under the Chapter 13 plan, the debtor is entitled to a complete discharge from all claims provided for in the plan. Certain long-term obligations including home mortgage, alimony and child support, most student loans, and criminal fines, if not fully paid pursuant to the Chapter 13 plan, will still be the responsibility of the debtor after the Chapter 13 case has successfully concluded.

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What are the advantages of filing Chapter 13 Bankruptcy?

In a consumer bankruptcy, Chapter 13 has certain advantages over Chapter 7. In a Chapter 7 Bankruptcy, also called a liquidation bankruptcy, any non-exempt assets owned by the debtor are subject to liquidation with the proceeds then distributed to the debtor’s unsecured creditors. A Chapter 13 Bankruptcy may allow the debtor to retain more of these assets. In most cases, a Chapter 13 Bankruptcy also allows the debtor to discharge more types of debt than in a Chapter 7. Filing Chapter 13 also immediately stops home foreclosure, as well as auto repossession and wage garnishment. It also provides the debtor an opportunity to make payments under more favorable conditions, such as lower to no interest rates.

Is Chapter 13 Bankruptcy right for me?

When most hear the words bankruptcy, what most likely comes to mind is Chapter 7 Bankruptcy. This, however, isn’t necessarily the type of bankruptcy which may best help avoid a San Antonio foreclosure or a vehicle repossession. A Chapter 13 Bankruptcy, in most cases, stops foreclosure and repossession immediately. It gives you to a fresh start, control over your financial future, and the peace of mind you need to once again fully enjoy life.

There are some debit limitations, both secured and unsecured, which may prevent a person for eligibility to file for Chapter 13 Bankruptcy. Also a person may not qualify if he or she has had a previous discharge under Chapter 7 or Chapter 13. As with any legal matter, it is best to contact an experienced attorney to assist you in determining your best solutions.

These are admittedly difficult times and there are many people throughout San Antonio who find themselves in tough circumstances through no fault of their own. There is help available. The first step to Chapter 13 Bankruptcy protection is to contact the Law Offices of Joe A. Gamez. We know Chapter 13 Bankruptcy. Our knowledgeable and professional attorneys can help create a budget and assist you in working with secured creditors. Together, we WILL develop a Chapter 13 plan which works for you.

When you’re ready to get serious about solving your debt problem call our offices at 210-736-4040.

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