A Chapter 13 Bankruptcy is a personal financial reorganization. To prepare a Chapter 13 we analyze our client’s financial situation and create a Plan for personal financial reorganization. The Plan often proposes a monthly payment over the course of three to five years. A Chapter 13 may be best suited for an individual or family who own a home, but have fallen behind in mortgage payments, and can’t afford to make a lump sum payment to bring the mortgage note current. The past due mortgage payments can be paid out in a Plan over a period of time, while current monthly payments are maintained. Chapter 13 allows time to apply for a loan modification program too. A Chapter 13 can also be utilized when individuals have fallen behind on car payments, or in some cases to pay off tax obligations.
A Chapter 13 might be required if a families income exceeds an allowable amount based on their family size. In that event, some amount of money will have to be paid to a Bankruptcy Trustee on a monthly basis. Often the Plan payments will be a percentage of outstanding debt, disbursed to the creditors by the Trustee in smaller increments over a period of time. In other words, the reorganization allows for less than full payment of all debt. This benefits the creditors in that they get some money back and it benefits the debtor in that they are able to relieve themselves of considerable debt while paying off some amounts required by the Code. The Debtor in a Chapter 13 mails one one check each month to a Court assigned Trustee, who then distributes money to the creditors.
In order to file a Chapter 13 bankruptcy, it is necessary that the client complete worksheets which we provide during our initial consultation. Further, we provide a documentation checklist to use as a guideline for the documents that will be necessary to obtain bankruptcy relief. In order to file a petition for relief pursuant to Chapter 13 of the United States Bankruptcy Code, tax filings must be current. If you have not filed tax returns, you must immediately contact your accountant and move forward in that regard.
In order to file for protection under the United States Bankruptcy Code, you also must complete approved credit counseling. The program can be completed online or by telephone. We will provide you with contact information to accomplish that task, and when the counseling session is complete they will send us a certificate which satisfies the Bankruptcy Courts requirement that the course has been completed.
Kindly call my office for a consultation so that we can discuss your financial situation, and determine how the Bankruptcy Code can help you now.