Wage Earner’s Plan Attorney in Makawao HI
What to Know About Chapter 13 Bankruptcy
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.
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 Wage Earner’s Plan Attorney in Makawao HI can review the facts of your situation to see if a cramdown is available for you.
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 the 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.
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 plan has to often face severe penalties. As long as you stick to the basic settlement, and there is no late or delinquent payments, you will have completed your plan and receive your discharge.
If you’re in need for a Wage Earner’s Plan Attorney in Makawao HI, call our office today and find out how we can work together to structure a plan of reorganization that is most beneficial to you!!!!