Most consumers who are struggling to pay their debts in Tucson seek to file Chapter 7 bankruptcy, which is the most common type of bankruptcy case in the U.S. However, some circumstances might make it more favorable for you to file under Chapter 13. Such circumstances might include:
- You have too much income to qualify for Chapter 7
- You have non-exempt property or assets you want to protect
- You have secured debts you would like to address
By consulting with a Tucson Chapter 13 bankruptcy attorney, you can discuss not only whether bankruptcy is the right debt-relief solution, but also what type of bankruptcy is most beneficial for you. Contact a trusted lawyer at Yusufov Law Firm PLLC in Tucson today.
Overview of Chapter 13 Bankruptcy
A Chapter 13 bankruptcy is often called a debt adjustment, as it gives you the opportunity to adjust your financial affairs without having to liquidate current assets. It is also sometimes called a wage earner’s plan because you need to have regular income to qualify for a Chapter 13 bankruptcy.
Rather than being designed to pay debts out of your current assets, a Chapter 13 case usually involves payment of debts out of future income (although you may also decide on some payment out of current assets). You are allowed to keep and use all your property, whether exempt or not, and to pay some or all debts according to a repayment plan approved by the bankruptcy court.
Am I Eligible for Chapter 13 Bankruptcy?
Meeting with Tucson Chapter 13 Bankruptcy lawyer German Yusufov and his office staff is a great start in understanding your financial position, and how we can help you attain the move in a positive direction. Your eligibility will depend on a variety of factors, including your income, assets, and debt. If you’re behind on your house payment, and are in jeopardy of going into foreclosure, Chapter 13 Bankruptcy may be right for you. If your income allows, and you have excessive unsecured debt, a legally negotiated repayment program could be the answer you’re looking for.
Your Chapter 13 Bankruptcy Plan
The repayment plan is a critical feature of a Chapter 13 bankruptcy, and also what most distinguishes this type of case from a Chapter 7 bankruptcy. The plan provides for the repayment of some of your debt over three to five years (the length of the repayment period depends on your income). You do not need to repay all of your debts under the plan, but you do need to commit all of your projected disposable income over the applicable time period to repaying your creditors.
Under the plan, you make regular payments to the bankruptcy trustee, who then distributes these payments to your creditors. Payments begin thirty days after the filing of the Chapter 13 case and continue for the duration of the plan (three to five years).
Because Chapter 13 allows you to catch up on past-due payments, it is particularly beneficial to those individuals who have fallen behind on payments of a secured debt, like a mortgage or a car loan, and need time to make up the past-due amounts. It should be noted that a Chapter 13 bankruptcy will not help to save a home if your income is not enough to make regular monthly payments and stay current on the mortgage. While you can wrap arrears into the repayment plan, you will still have the responsibility to keep up with current payments on the home. However, in many instances, by using the Chapter 13 procedure to reduce or eliminate payments on other debts, like credit cards, sufficient income can be freed to allow you to make payments on the mortgage.
The Chapter 13 Bankruptcy Process
A Chapter 13 bankruptcy, just like a Chapter 7 bankruptcy, is initiated by the filing of a petition with the bankruptcy court in Tucson if you reside in Pima County, or in Phoenix if you reside in Maricopa County. You must also pay a filing fee of $310 and file statements with detailed information about your financial affairs. You must provide thorough details of your income, liabilities (debts), expenses, and assets and property. As soon as you file the petition, a court order called the “automatic stay” goes into effect, which automatically stops most collection actions for your debts.
In addition to the above documents, you must also file a Chapter 13 Plan. It is important to work closely with your Tucson Chapter 13 bankruptcy attorney to come up with a plan proposal that works in your situation based on your income and expenses.
Twenty to fifty days after the filing of the petition, the debtor will attend a meeting of creditors, where, just like in a Chapter 7 case, the trustee and the creditors will have an opportunity to ask you questions. Just like in Chapter 7, in most cases, the creditors do not attend the meeting, and only the trustee is present and asks questions (click here for a list of questions the trustee may ask). It is still wise to have your Tucson bankruptcy attorney representing you at this meeting.
Within forty-five days after the meeting of creditors, the bankruptcy judge must hold a hearing to determine if the plan can be confirmed and approved. However, in most cases, this hearing gets postponed while the trustee reviews the plan. Your attorney can negotiate with the bankruptcy trustee to ensure your payment amount is reasonable, given your circumstances.
Confirmation of the plan makes it formally binding on both you and your creditors, and then, you will make regular payments to the trustee for the duration of your plan. Once you complete your payments under the Chapter 13 plan and comply with certain administrative requirements, you can receive a discharge of your remaining qualified debts.
The discharge releases you from all debts provided for by the plan or disallowed under the Bankruptcy Code, with limited exceptions. This means that you are released from personal liability for these debts, and the creditors owed those debts cannot take any collection actions against you at any time in the future.
Chapter 13 Bankruptcy Pros and Cons
Every type of bankruptcy case has its possible pros and cons. Some common benefits of a Chapter 13 case include:
- Can save a home from foreclosure by repaying past-due mortgage payments over time
- Can extend other secured debts over the life of the Chapter 13 plan
- No direct contact with creditors while under Chapter 13 protection
On the other hand, some cons of the Chapter 13 process are:
- The debtor must have regular income
- Disposable future income must be committed to repaying creditors
Learn More by Consulting with a Tucson Chapter 13 Bankruptcy Attorney
To learn whether Chapter 13 bankruptcy is advisable in your situation, please consult with a Tucson Chapter 13 bankruptcy attorney at Yusufov Law Firm PLLC. You can contact us online or by calling (520) 745-4429 in Tucson, or (480) 788-0098 in Mesa and Phoenix, for a free consultation.
- What debts can be discharged?
- Can I keep my house?
- Will bankruptcy stop wage garnishments?
- Do I have to give up all my assets?
- Do I have to list all my debts and assets?
- How will bankruptcy affect my credit?
- Can I discharge a payday loan?
- Can I eliminate my mortgage?
- What is a meeting of creditors?
Call us at (520) 745-4429 or (480) 788-0098 or fill out the form below and we will contact you.