Thinking about filing a chapter 13 bankruptcy? Here is what you need to know.
At the Law Offices of Warner Mendenhall, we represent clients in Chapter 7 and Chapter 13 bankruptcies. Chapter 7 discharges all your debts, but not everyone is eligible. Chapter 13 restructures your debts and is often used to restructure mortgage arrearages and stop a foreclosure. Both chapters are beneficial, and we will advise you on which one is best for you. For more bankruptcy information, please visit this website.
The first step in the bankruptcy process is a planning meeting with us. All of our initial consultations are free. At this meeting, you will tell us about your current financial situation. We will ask you if you own a home and what kind of mortgage may be attached to it. We will also want to discuss your unsecured debts, such as credit cards and medical bills. One of the crucial questions that we will ask you is whether you have ever filed for bankruptcy before. This is important because you can only file for certain types of bankruptcy if a certain amount of time has passed between filings. Please see the following scenarios:
- You may file for a Chapter 7 bankruptcy every eight years.
- If you filed a Chapter 7, you must wait four years before you can file for a Chapter 13 bankruptcy.
- If you filed a Chapter 13, you must wait six years before filing for a Chapter 7 bankruptcy.
- If you filed a Chapter 13, you must wait two years before filing another Chapter 13 bankruptcy.
If you retain us, we will get to work on your petition. We will send you home with a questionnaire that asks you to list your assets, debts, monthly income, and expenses. When you return the questionnaire to our office, you will also bring any relevant financial documents, your past two tax returns, and your last six pay stubs.
You must then complete a credit counseling course required by the court. Chapter 13 is considered a restructuring of debt; this means that some of your unsecured creditors will get paid out of the plan. Typically, we aim for the plan to pay for 1% of your total unsecured debt. This will be added to your secured debts, attorney’s fees, and trustee’s fees. These will account for what your monthly plan payment will be. The payment plan under Chapter 13 is usually between 3-5 years.
After filing your petition, you will attend a 341 meeting of creditors. At this meeting, you will be represented by counsel, and the trustee for your case will lead the meeting. Creditors may show up and ask you about your petition and even object to your plan. If there are no objections, the trustee will approve your plan, and you will begin making monthly payments to the trustee. If you become unable to make your monthly plan payments, we will represent you and try to get the plan modified and manageable. If you have bankruptcy questions, please reach out to us here.