Kansas City, MO -- (SBWIRE) -- 02/22/2013 -- Chapter 13 bankruptcy can be complicated; however the results are always worth it. It is very important to seek the advice of an attorney who practices in Chapter 7 and Chapter 13. The difference between succeeding in your plan and failure can depend on having a dedicated attorney who is creative. Even if you think you might not be ready to file, seek advice of counsel sooner rather than later. When you file your case and getting ready to file your case can sometimes be the difference between success and failure.
In Chapter 13, you will be asked to make a payment into the Chapter 13 Trustee who will then pay your creditors pursuant to a Chapter 13 Plan that you file. Your unsecured creditors will only receive money if you can afford to pay them and only at the amount you can afford. In some cases, unsecured creditors receive nothing while in others they receive full payment. Your case may be anywhere in between 0% to 100% to unsecured creditors. This depends on your Means Test and the property you own.
Why File a Chapter 13 bankruptcy?
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In addition to having all your unsecured debts discharged at the end of your case, you can potentially do the following:
- Save your home from foreclosure
- Save your car from repossession
- Pay the taxes that you owe while protected in bankruptcy ( and potentially discharge taxes more than 3 years old)
- Catch up on your child support or maintenance (known as "domestic support obligation" in bankruptcy court)
- Work out payment of student loans
- Stop the harassing phone calls
- Restructure the payments on secured debts other than your house (lower the payment amount0
- Stop lawsuits and garnishments
- Walk away from contracts such as rental agreements or cell phones.
Do I qualify for a Chapter 13 bankruptcy?
In order to file your Chapter 13 case, you must meet some basic criteria;
You have not had a Chapter 13 case dismissed in the past 180 days for failure to follow an order of the Court.
You have not filed a Chapter 7 bankruptcy in the last 4 years. There is an exception which would not allow you to discharge debts but protect your home from foreclosure.
You must take a credit counseling course set up by your attorney before you file.
You must have filed all the tax returns you were required to file in the last 4 years. If you were not required to file, then you qualify to file your bankruptcy.
You must a positive budget to pay for your Chapter 13 plan. If you want to keep your home, you will need to be able to make the ongoing payments. We may be able to lower your car payment for you to help with your budget if the balance of your current loan takes less than five years to pay off the loan. Talk with your attorney to work on the budget as they can often help you find out where you are making mistakes with your finances.
You must be able to make your ongoing child support and maintenance obligations.
There are debt limits for Chapter 13 but most people do not have any issues with this.
Missouri gives debtors who reside in their state for the proper time period certain property they can keep free and clear. A good example is that you can receive $15,000.00 of equity in your house. If you have more than the amount allowed, you will have to agree to pay the difference into unsecured creditors. Some elderly people do not qualify in Missouri because their homes have too much equity and they do not have the funds to pay into the Trustee to unsecured creditors. Kansas residents don’t have the same problem with equity as we do here in Missouri. The Court has rules on how value is determined and therefore it is important to speak with an attorney to properly claim your exemptions.
What does bankruptcy cost?
Bankruptcy attorney fees for a Chapter 13 case are normally $3,000.00. The attorney normally requires you to pay $1,500.00 of these funds up close; however, if you have a garnishment or foreclosure, the requirement may be lower. You will also be required to pay $400.00 to cover your filing fee, credit counseling course, credit report, and financial management course. The $400.00 also must be paid prior to fling Our office requires you to pay $200.00 to get the case started.
Does my Spouse have to file?
No. However, if you are still living together, you will likely have to include their income in your budget and the means test.
A Chapter 13 bankruptcy is to help people keep their homes, vehicles or other secured property. It is also perfect for people who owe child support or a domestic support obligation of some type. If you owe a domestic support obligation, you are not elgible for a Chapter 7 discharge. Another good reason for Chapter 13 is if you owe taxes.
In a Chapter 13 case, you make a payment to the Trustee. The Plan will pay off any amount you are behind on a mortgage (if you are keeping your home and are behind on your mortgage), pay a vehicle lender, taxes you owe, and taxes. You will only pay unsecured creditors if you can afford it. The unsecureds may not receive anything or they could receive up to 100%. If you owe student loans, they may be part of the plan as well. You will need to discuss this with your attorney.
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