Chapter 13 Bankruptcy Lawyer Serving Eugene & Springfield, Oregon
Individuals and married couples have access to two types of bankruptcy: Chapter 7 and Chapter 13. While Chapter 7 is an excellent option in most cases, Chapter 13 can handle many more different types of debt. Chapter 13 is known as “reorganization bankruptcy”. All of your debts are consolidated into one lump-sum payment paid monthly over the course of three or five years. These payments work within your budget and you may be able to discharge at least a portion of your unsecured debt. For more information on Chapter 13, talk to a Lane County bankruptcy attorney today.
How Chapter 13 Can Help You
Chapter 13 bankruptcy provides a viable option to restructure your finances. For example, filing a Chapter 13 bankruptcy will immediately stop a foreclosure sale and allow the homeowner to cure the arrears or make other arrangements over the next 3-5 years, thereby saving the home. Chapter 13 also allows for a structured repayment of certain debts that are not dischargeable, such as certain income taxes and support obligations. Chapter 13 is also a great tool to reinstate a driver’s license and recover a repossessed vehicle.
Additionally, like a Chapter 7 bankruptcy, a Chapter 13 bankruptcy will stop wage garnishments. Chapter 13 bankruptcy will also stop the Oregon Department of Revenue (ODR) and Internal Revenue Service (IRS) levies and seizures. In some instances, a Chapter 13 bankruptcy may even allow second mortgages to stripped and allow judicial liens to be avoided from real estate.
As soon as you file any form of bankruptcy, all creditor actions against you must stop. This includes harassing telephone calls, wage garnishments, lawsuits, and more. This is known as bankruptcy’s automatic stay and it applies to all forms of bankruptcy.
Chapter 13 Eligibility Requirements
Like Chapter 7 bankruptcy, there are eligibility requirements. While Chapter 7 prevents those who make too much money from filing under Chapter 7, Chapter 13 has debt limits. In other words, you can owe too much money to file under Chapter 13.
As of April of 2019, debt limits are capped at:
● $1,257,850 of secured debt, and
● $419,275 of unsecured debt.
Those who owe too much money to file under Chapter 13 always have the option of filing under Chapter 11.
Additionally, you will need to have a steady income to begin your repayment plan. The court will not authorize a Chapter 13 bankruptcy if you do not have steady income or your income isn’t sufficient to meet the obligations of both your monthly Chapter 13 payments and your other financial obligations.
The Chapter 13 Repayment Plan
Chapter 13 consolidates your debts allowing you to make monthly payments on all of them simultaneously. However, you don’t have to repay all your debts entirely. Otherwise, you’d simply be in the same position you were before, but instead of paying individual creditors, you’d be paying a trustee.
With the help of your Chapter 13 bankruptcy attorney, you will come up with a repayment plan that is manageable within your finances and satisfies your creditors. For this to work, there must be a hierarchy of debts. In other words, some debts are considered more important than others.
The Chapter 13 Repayment Plan
Your Chapter 13 repayment plan must include certain debts that are repaid in full. These include alimony, child support, and most types of tax debt. These are considered the most important debts in Chapter 13. Next in line is:
● Secured debt - For those who are interested in keeping their home or a vehicle they are still making payments on, you will have to continue to make regular payments and make up any arrearages that may still exist.
● Unsecured debt - Unsecured debt is the lowest priority in Chapter 13. You will probably have to repay some of your unsecured debts, but the remainder will be discharged at the end of your bankruptcy.
Monthly Payments &The Chapter 13 Trustee
When you file a Chapter 13 bankruptcy, a trustee will be assigned to the case. In the District of Oregon, Eugene Region, the Trustee is Naliko Markel; in the District of Oregon, Portland Region, the Trustee is Wayne Goddare.
The duties of the Chapter 13 Bankruptcy Trustee are numerous. For example, the trustee will review your documents to make sure that your repayment plan is financially viable. The trustee will receive monthly payments from you and disburse those payments to your creditors minus administrative costs.
As long as you make your monthly payments to the bankruptcy trustee and comply with your Bankruptcy Plan, creditors will not be able to garnish you, your home will not be foreclosed upon, and you have the ability to take tremendous control of your finances without the fear of creditors suing you.
What is the Chapter 13 Bankruptcy Process?
The first part of the process is meeting with your Lane County Chapter 13 bankruptcy lawyer. We will go over your existing debts and come up with a repayment plan that works within your budget and cannot be rejected by your creditors or the bankruptcy trustee. Once your paperwork is in order, you will need to take a pre-filing credit counseling course. These can be done over the phone or online. Afterward, we file your paperwork and your Chapter 13 bankruptcy officially begins. It is now that the automatic stay will go into effect. Then:
● The court will assign a trustee to oversee your case
● The court will notify your creditors concerning your pending Chapter 13
● Creditors can file objections to your repayment plan
● The trustee requests specific documents and you provide them
● You begin making monthly payments on your plan
● You attend a meeting of creditors where creditors can raise objections to your plan
● If necessary, you file a modified plan
● You and your lawyer will attend a confirmation hearing
● Your creditors submit proofs of claim to validate the debt
Unlike Chapter 7, your bankruptcy is still considered open while you are making payments and will only be considered closed once the three- or five-year period has elapsed. During that time, your bankruptcy trustee will give you bi-annual progress statements indicating how much you’ve paid and how much you still owe. At the end of your repayment plan, you will receive a discharge of any unsecured debt yet to be paid.
Can Chapter 13 Bankruptcy Save My Home?
Chapter 13 bankruptcies are uniquely suited to manage secured debt. Even if your home is in foreclosure, a Chapter 13 can roll your arrearages into the repayment plan. You will have to continue making monthly payments on your mortgage moving forward, but a Chapter 13 filing will stop the process of foreclosure dead in its tracks and provides the best tool available to save your home, primary vehicle, or other property secured by a lender’s lien.
Can Chapter 13 Handle My Student Loans?
If you’re making payments on your student loans, those can be rolled into your Chapter 13 bankruptcy. Chapter 13 won’t, however, discharge your student loans once the bankruptcy is complete. In other words, once your bankruptcy is over, you will still need to make payments.
Talk to a Lane County Chapter 13 Bankruptcy Lawyer Today
Tom Butcher has helped many folks manage their crippling debt and find their way to financial solvency. If you think bankruptcy can help you, give our law office a call today and Tom will be happy to sit down with you and discuss your options moving forward.
The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. Contacting us does not create an attorney-client relationship.