CHAPTER 13 BANKRUPTCY
1. WHAT IS CHAPTER 13?
CHAPTER 13 is a court-reviewed and approved debt
repayment plan. Generally, the plan will last from
three (3) to five (5) years. In no case can it last
longer than five (5) years. The law allows for certain
loan agreements to be favorably modified for your
benefit. Also, various unsecured debts (credit cards,
medical bills, utility bills, lease deficiencies,
etc.) can be legally satisfied for pennies on the
dollar.
2. WHO CAN FILE CHAPTER 13?
The two (2) general requirements to participate
in a Chapter 13 plan are a regular source of income
and the ability to complete the
repayment plan within 60 months. "Income" is considered
to be wages, commissions, Social Security benefits,
pension/retirement income, child/spousal support,
or any other regular, on-going source of funding.
Most people with regular income can
develop a repayment plan that will complete within
the required time frame. Each case is different,
but an experienced debt counselor can assist you
in putting together a plan that will save your property,
and get you right back on track.
3. CAN I KEEP MY HOME, AUTO,
AND OTHER PERSONAL PROPERTY? The short answer
is - Yes!! The goal and guiding principle of Chapter
13 is to give a person temporary relief from having
to pay all creditors in full all at once. The aim
is not to seize and liquidate your assets. So long
as an acceptable plan of repayment is proposed,
and the payments made on a timely basis, you will
be able to keep your home and your assets.
4. HOW MUCH WILL MY MONTHLY
PLAN PAYMENT BE? Many people mistakenly believe
that they will have to pay 100% of their debt in
a Chapter 13 plan of reorganization. Clients are
almost always pleasantly surprised to learn that
Chapter 13 requires repayment of only that portion
of the debt as you can reasonably afford!!! The
amount of your monthly plan payment will depend
on your particular situation. Generally, however,
the Court will allow you to develop a budget
to pay your regular, on-going household expenses
from your net income. The amount left over will determine
the amount of your monthly plan payment.
5. HOW DO I STOP CREDITORS
FROM HARASSING ME? The minute your case is filed,
and the creditors notified of the filing, the law
prevents any and all further creditor contact with
you...period. This means an end to any pending lawsuit,
wage garnishments, dunning letters, and those never-ending
telephone calls. We will be able to handle all creditors
as part of your representation. You will not have
to deal with them ever again!
6. WILL CHAPTER 13 STOP MY
FORECLOSURE ACTION? Yes. Upon the filing of
the case, the law requires that any foreclosure
proceeding be immediately halted. So long as you
can resume the regular monthly payments, and repay
the past due amount within a five (5) year period,
the mortgage company will have to live with your
plan of repayment!!
7. WILL CHAPTER 13 STOP REPOSSESSION? Yes. If the petition is filed
prior to the seizure, the creditor will be prevented
from repossessing the property. If the property
has already been repossessed, but not yet sold at
a liquidation sale, the filing of the petition for
relief will usually stop the repossession process,
and the creditor will immediately return the asset to you.
8. WILL I HAVE TO GO TO COURT?
Yes. Approximately thirty (30) days after the petition
is filed, there will be a brief, informal hearing
you will need to attend with your lawyer. At this
hearing, a representative of the Chapter 13 Trustee's
Office will ask you a series of questions about
your assets, income, budget and repayment plan.
Also at this hearing, your first plan payment will
be due. This starts the process of repayment of
your creditors. Creditors may attend this hearing,
but usually do not do so.
9. WILL CHAPTER 13 HURT MY
CREDIT RATING? Most people needing the benefits
and protections provided by Chapter 13 already have
a few dents in their credit history. Your mortgage
and all other debts will be repaid on a timely basis by the local
Chapter 13 Trustee. Thus, your
on-time payment history will be put back on track. Once
your case is concluded, the Trustee's Office will
assist with the correction of your credit report,
and provide you with a listing of potential credit
grantors who understand just what you have accomplished
in completing your Chapter 13 plan of repayment!!
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CHAPTER 7 BANKRUPTCY
1. WHAT IS CHAPTER 7? Chapter
7 is that section of the bankruptcy law which allows
a person to discharge, or eliminate, a substantial
portion of his/her debts. Chapter 7 can only be
filed once every six (6) years. Most debts are dischargeable
under Chapter 7. However, some debts such as taxes,
child support, spousal support and student loans
cannot be discharged. The concept behind Chapter
7 is to give a person with substantial debt (which
could never be repaid within a reasonable time)
the ability to have a "fresh start".
2. WHO CAN FILE CHAPTER 7?
Generally, any adult citizen who has lived in a
particular judicial district for the past 180 days,
who has not received a Chapter 7 discharge in the
past six (6) years, can file for relief. There are
a couple of exceptions, but these restrictions rarely
apply.
3. WHAT ARE THE BENEFITS OF
CHAPTER 7? Chapter 7 allows for the discharge,
or elimination, of most debts. The purpose of Chapter
7 is to give a person a "fresh start" once debt
becomes overbearing and is more than you can reasonably
pay. There are many debts which may be discharged:
credit cards, medical bills, repossession debt,
broken lease debts, unsecured judgments, utility
bills, bad check charges, some taxes, etc.
4. WHAT DEBTS CANNOT BE DISCHARGED?
Basically, most taxes, child/spousal support, student loans, debts involving
fraud, deceit or dishonesty, and any debts arising
from malicious or tortious conduct.
5. WILL I HAVE TO GO TO COURT?
Yes. Approximately thirty (30) days from the filing
of the case, there will be a hearing which you must
attend with your attorney. At this hearing, you
will be briefly questioned as to the debts and assets
listed in your schedules. You will also be asked
to produce documentation to support the information
contained in your court papers. In most cases, you
will then simply receive your Chapter 7 discharge
of debt within the next 30-45 days.
6. WILL CHAPTER 7 STOP A FORECLOSURE
ACTION? Short-term - yes, but ultimately Chapter
7, in most cases, will not save your home. If the
mortgage is behind, or in default, the lender will
eventually obtain permission from the Court to reactivate
the foreclosure case after it has been temporarily
halted by the Chapter 7 filing. However, if the
mortgage is current, or can be made current, and
there is little or no equity in the home, it may
be possible to "reaffirm" the debt with the mortgage
company. This will allow you to keep the property.
Each case is fact-specific, and an experienced professional
should be consulted.
7. WILL I LOSE MY CAR OR OTHER
PROPERTY IN CHAPTER 7? The value of an automobile
or other personal property will determine whether
it can be retained in a Chapter 7 case. Under Ohio
law, every person may exempt (or shield from the
reach of creditors) a certain amount of equity in
a vehicle, and any other personal property. If the
account with the creditor is substantially current,
and the value of the asset does not greatly exceed
the allowed exemption amount, it is likely that
an agreement can be reached with the creditor so
that you may retain this property.
8. WHAT IS THE EFFECT OF A
CHAPTER 7 DISCHARGE? Once all legal requirements
have been met in your case, the Court will issue
an order discharging all debts which were properly
scheduled, and entitled to discharge. Thus,
these debts are forever eliminated, and can never
be collected at any point in the future. You will
then have the "fresh start" you need.
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For more information on Chapter 7 and Chapter
13, call Spiroff Law at 614/224.2104.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code. |
