According to the Administrative Office for U.S. Courts, there were approximately 288,039 Chapter 13 bankruptcy filings during the fiscal year ending on March 31, 2019. In fact, Chapter 13 bankruptcy was the second most-used type of bankruptcy besides Chapter 7 during the 2019 fiscal year. These individuals used the bankruptcy system as a legal way to obtain a new financial start, and so can you. As a bankruptcy lawyer in Spring Hill, FL, our bankruptcy attorney has seen and understands how stressful life can become during times of financial hardship. Often, our clients come to us during a period where they feel like there is no path to financial freedom, but the bankruptcy lawyer at the Peck Law Firm can likely help you. However, the first thing your bankruptcy lawyer must determine is which type of bankruptcy is appropriate in your unique situation. This determination is based on a number of different factors including your income, whether you want to retain certain assets, and the types of debts that you owe.
One of the primary differences between Chapter 7 bankruptcy and Chapter 13 bankruptcy is your ability to keep certain assets and your liability for having to pay off certain debts in the future. During a Chapter 7 bankruptcy, non-exempt assets will be transferred to a trustee who will then sell the property and use the proceeds to pay your creditors, whereas when you file a Chapter 13 bankruptcy, you will be able to retain your assets. However, you will be required to repay your creditors with your future income based on the provisions of a court-approved repayment plan.
Chapter 13 bankruptcy is also the next best option for individuals that have failed the requisite means test under a Chapter 7 bankruptcy. The means test was enacted and designed to exclude certain debtors, i.e. individuals filing for bankruptcy. If you fail the means test, a judge will either dismiss your petition for bankruptcy or convert the bankruptcy into a Chapter 13 bankruptcy with your consent pursuant to 11 U.S.C. § 707(b)(1).
There are only a few eligibility requirements that an individual must satisfy in order to qualify for relief under Chapter 13 of the Bankruptcy Code. First, it's important to understand that an individual must voluntarily elect to file for bankruptcy under Chapter 13. Thus, unlike filings under Chapter 7, an individual can never be involuntarily forced to file for bankruptcy under Chapter 13. Second, any individual, including those that are self employed or operating an unincorporated business, can file for bankruptcy under Chapter 13, so long as the following requirements that are codified under 11 U.S.C. § 109(e) are satisfied as of the date of the filing of the petition for bankruptcy:
Moreover, if you have regular income and your spouse’s debts meet the criteria above, you can also qualify for a chapter 13 bankruptcy.
As stated, one of the key features of filing bankruptcy under Chapter 13 is that you will be required to submit and get court-approval of a repayment plan that complies with the specifications codified under 11 U.S.C. § 1322. This plan can be rejected by either the court or secured-debt creditors. Unsecured creditors do not get a vote on the plan. You will be required to begin making payments according to the provisions of the plan within 30 days. Discussing, drafting, and getting your plan approved can be a complicated process. Similar to a Chapter 7 bankruptcy, a trustee will automatically be appointed, and the goal of this trustee is to collect future income from you that will be disbursed pursuant to the provisions of 11 U.S.C. § 1322(a)(1). The trustee will be intimately involved with your case throughout the bankruptcy process, and thus, it is always advisable to have an experienced attorney throughout the process in order to ensure that your repayment plan is submitted, approved, and executed without a problem.
As a bankruptcy lawyer in Spring Hill, FL, our attorney understands that the vast majority of people that contact our office are unsure what their next step should be. You may be in a position where you realize that you have to do something, but you are unsure of what your legal options are or even whether or not you want to declare bankruptcy. These feelings are common, and it is important for you to understand that bankruptcy lawyers, at their core, are financial advisors. The job of a bankruptcy lawyer is to explain what your legal options are, discuss possible alternatives to filing bankruptcy, and to assist you with the development of a plan of action that allows you to properly address your financial difficulties. For example, when filing for a Chapter 13 bankruptcy, many homeowners who are behind on their mortgage are interested in creating a repayment plan that allows them to repay their arrearage over time by increasing the amount of their normal monthly payments. These case-specific options are what an attorney is ultimately there to explain.
Thus, at a minimum, we would encourage you to contact the Peck Law Firm today to schedule a free, confidential consultation, so our bankruptcy attorney can help you determine the most appropriate course of action to address your unique situation.