Chapter 13

Chapter 13

Chapter 13 Bankruptcy Attorney in Maui

What to Know About Chapter 13 Bankruptcy

Chapter 13 Bankruptcy

When deep in debt and unsure of what to do the option of Chapter 13 can feel like an embarrassment or a failure on your own end. When in reality it can lead to relief. Creditor calls stop, you can protect yourself, and put yourself on a plan towards clearing your debt.

Starting from the basics of Chapter 13, it is well-known as the Wage Earner’s Plan. This Chapter of the bankruptcy code enables people who have regular income to form a plan so that they can repay all their debts efficiently. Chapter 13 Bankruptcy includes statements where debtors can propose a repayment option to make installments to their creditors over three to five years. The key thing about Chapter 13 is that in no way does the debtor lose any property.  No assets are taken by a trustee or administered to repay creditors.

Under the chapter, if the debtor’s current income is less than the state median, then the minimum period to pay the debt will be three years unless the debtor gets approved for a longer period. Whereas if the debtor has a current income higher than the state median, then the plan can be extended for five years. And under no circumstances, will the period be longer than five years. Within the specified period, the law forbids the creditors from collecting anything from the debtors.

Those of us here at Blake Goodman Attorney want to help you find the best possible solution for your situation. If that is Chapter 13 then we may be able to help you on your path to climbing out of debt. We can try to help you work through your bankruptcy and maybe give you further advice on what to do after Chapter 13.

Chapter 13 Advantages with Homes and Cars

One of the key aspects of Chapter 13 is that debtors with real property delinquencies can cure those arrearages inside the plan and prevent the mortgage company from foreclosing.  Also, unlike in Chapter 7, car payments can oftentimes be favorably lowered on a monthly basis.

Your Home in Chapter 13

A Chapter 13 bankruptcy establishes a payment plan whereby you can catch up with your secured debt obligations (including a mortgage). Once the plan is approved by the court, you will make one single monthly payment to the bankruptcy trustee. This repayment plan will include provisions to help pay off any accumulated mortgage arrearages (the back amount owed). Chapter 13 bankruptcy is the cheapest, most sure-fire way to save your home and other real property from foreclosure.

Another benefit of Chapter 13 is for homeowners who have a second mortgage and owe more money on the primary mortgage than the property is worth. In this situation, the second mortgage or line of equity may be eligible for a complete discharge, known as a “lien strip.”  This can be extremely helpful for homeowners whose property value has dropped in recent years.

Your Car in Chapter 13

The depreciatory nature of an automobile means that people sometimes owe more for a vehicle than its actual value. If this is the case, when you file for bankruptcy, then you may qualify for what is called a “cramdown.” A cramdown reduces the amount owed to the car’s actual value because this is the amount that the lender would receive if it was repossessed and sold at an auction. To qualify, you must have purchased the car more than 2 ½ years prior to bankruptcy, along with other requirements. A qualified Maui Chapter 13 bankruptcy attorney can review the facts of your situation to see if a cramdown is available for you.

Your Credit in Chapter 13:

Your credit is going to take a hit when you file for Bankruptcy. That much is obvious, but while it might feel like you are never going to recover we can maybe help you get your credit back up far quicker than you think.

We offer a 720 Credit Program that is meant to help our clients repair their credit score after bankruptcy. In 12-24 months you’ll be back up to 720+ credit and back in good standing. Many of our clients even find finance options for their home and vehicles while still in the Chapter 13 process.

If you are still concerned about your future credit options, such as future interest rates, then come in and discuss your concerns with us. We may be able to help with any fears you still have.

Eligibility:

Chapter 13 gives a relief to the debtor unless their debt amount is more than a certain amount. It means that the debtor must have:

  • Regular income
  • Unsecured debts of $419,275 or less
  • Secured debts of $1,257,850 or less

These amounts are adjusted periodically as the Consumer Price Index changes.  In Chapter 13, a trustee gets appointed, but he/she has the limited role of disbursing the debtor’s payments to creditors according to the proposed plan.

Understanding the laws in actual terms can be tough. So, we make sure that you understand how the law works and how it can help you.

Working Process:

Under Chapter 13, the petitioner files a case and submits a reorganization plan that requests that after all payments are made, the debtor will be forgiven of all remaining balances on his/her debts, and as well safeguards all income and assets against levy, garnishment, repossession or foreclosure.  It is opted for by many people, when filing a Chapter 7 filing would force the liquidation of any unprotected assets.

The debts owed for child support, alimony payments, and recent taxes will be paid in full in by the plan, but as in Chapter 7, student loans not paid in full during the plan will remain non-dischargeable. The process on Maui involves the following steps:

  • The applicant has to provide the list of creditors and the amount due, disclose all business and wage income, claim all reasonable and necessary living expenses, and disclose recent financial transactions and certain events.
  • The listing of property must also be submitted as well as the accounting information of all contracts and leases written in the debtor’s name.
  • Tax Information which includes a copy of most recent federal tax return.
  • The debtor also proposes a repayment plan for the debt.

The judge will hold a hearing confirming the proposed plan.  At the hearing, it is determined whether the plan meets the basic requirements of the Bankruptcy Code or not. If the creditors have any objection to the plan, then they must raise these at the hearing. At last, the court enters the final decision.

If the plan is confirmed, then the creditors are stayed from attempting to recover any debt under the period specified by the plan’s duration. Any one creditor that fails to respect the terms of the plan has to often face severe penalties. As long as you stick to the basic settlement, and there are no late or delinquent payments, you will have completed your plan and receive your discharge.

What about Tax Debt and Student Loans?

For many people two of the biggest debts that send them towards bankruptcy are years of built up tax debt and student loans. Chapter 13 can help with these depending on your situation.

While Chapter 13 can’t remove your student loans there is an option to consolidate them into your Chapter 13 payment plan so once you’ve paid everything off, they will be paid as well. This is just an option of course. Speak with us and we may be able to help you decide if this is the best option for you.

What Chapter 13 can do for you is give you some help with your tax debt. Speak with us and explain your situation and we can try to give you more information on how Chapter 13 can lead to the elimination of your tax debt.

Contact Us

If you are in need of a Chapter 13 Bankruptcy Attorney in Maui, call our office today. Blake Goodman has been practicing Bankruptcy law for 22 years across three different states. He has been operating in Hawaii since 1998 and in Maui for a year now. He brings experience and expertise that cannot be matched.

Find out how we can work together to structure a plan of reorganization that is most beneficial to you. We understand that life is not easy and sometimes you need some help getting back up. Let us work out a way to help you. Call us at 808-426-2004