Chapter 13 Bankruptcy

The word bankruptcy conjures up visions of individuals wiping away their debts and forfeiting their assets. This may hold true for some cases, but the story is a bit different for those who opt for Chapter 13 bankruptcy in Prince George’s County. 

Chapter 13 bankruptcy Charles County offers a route that doesn't eliminate debt but allows individuals to retain their assets and gradually repay all or a portion of their financial obligations via a structured repayment plan.

Are you grappling with financial difficulties and considering bankruptcy? Before you make a decision, call us. Our Chapter 13 bankruptcy lawyers will help you weigh the long-term consequences carefully and guide you in making the right decision.

What Is Chapter 13 Bankruptcy

Chapter 13 bankruptcy, also known as a wage earner's plan, offers you a steady income and the opportunity to create a structured repayment plan for your debts. Here's how it works:

• You propose a plan to repay creditors over three to five years.
• If your monthly income is below the state median, the plan typically lasts three years unless the court approves a longer period for specific reasons. 
• If your income exceeds the state median, the plan must last for five years at most.
• While the repayment plan is in effect, creditors are prohibited from contacting you and continuing collection efforts.

Chapter 13 bankruptcy Largo allows you to manage your debts responsibly while protecting your assets and providing a structured path toward financial stability.

Why Choose Chapter 13

Chapter 13 bankruptcy Prince George’s County might be a viable option under these circumstances:

• If your debts amount to more than 40 percent of your annual income or if it would take more than five years to pay them off, even if you exert yourself.
• If you wish to retain certain assets, such as your home or car, and need the plan to catch up on missed mortgage or car payments gradually.
• When most of your debts, such as student loans or child support, are non-dischargeable in Chapter 7.
• If you have a co-signer on a debt in arrears, Chapter 13 Upper Marlboro allows you to include the co-signed debt in your repayment plan, safeguarding your co-signer from creditor actions.

Our Chapter 13 bankruptcy Waldorf attorneys can guide you in making the right decision if you plan to declare bankruptcy under Chapter 13 bankruptcy.

Who Can Qualify

To qualify for Chapter 13 bankruptcy, Charles County, you must comply with specific legal and practical requirements:

• You must not have had a Chapter 13 discharge within the last two years or a Chapter 7, 11, or 12 discharge within the previous four years.
• If a prior bankruptcy petition was dismissed within the past 180 days due to a court order violation or personal request, you must wait 180 days to reapply.
• Before filing, you must complete credit counseling from an approved agency within 180 days.
• Your unsecured and secured debts should be under specific amounts. It is important to note that these figures are adjusted periodically.
• You must be current on all income tax filings and file all state and federal income tax returns while your bankruptcy case is open.

Chapter 13 bankruptcy requires a court-approved repayment plan. 

You must have paid certain claims such as taxes, child support, and alimony in full. 

You must prove that you are maintaining mortgage and auto loan payments to retain assets.

Your unsecured claims need not be paid in full, but your plan must show all disposable income toward these debts. The bankruptcy code requires regular monthly income to file Chapter 13 bankruptcy Clinton. You must also be able to suggest a practical repayment plan that meets legal requirements and fits within your income.

Our Chapter 13 bankruptcy attorney can help assess your eligibility and guide you through the process of proposing a repayment plan. They can determine if Chapter 13 is the right option for your financial situation.

Chapter 13 Filing: Pros and Cons

Filing for Chapter 13 bankruptcy is a huge decision that can majorly impact your future finances and lifestyle. That’s why you must decide to enter into Chapter 13 bankruptcy with care after careful consideration of all the pros and cons.

Pros:

• Asset Retention: You can keep assets such as your home, car, and personal property.
• Halting Collection Efforts: Collection efforts by creditors will cease as soon as you file for Chapter 13.
• Co-Signer Protection: Co-signers on your debt are automatically protected from collection efforts unless the court decides otherwise.

Cons:

• Credit Report Impact: A Chapter 13 bankruptcy will stay on your credit report for up to seven years.
• Credit Challenges: It may be harder to obtain credit, purchase a home, buy a car, rent an apartment, or secure employment for some time.
• Longer Debt Discharge: Unlike Chapter 7, where debts are discharged quickly, Chapter 13 involves a three- to five-year payment plan before debts are discharged.

Bankruptcy is a significant decision with lasting effects. Understand the potential impact of Chapter 13 bankruptcy Prince George’s County on your credit, ability to obtain credit, and other financial aspects before you make a decision. 

Our Chapter 13 bankruptcy attorney can help you fully comprehend how Chapter 13 will affect your specific situation and goals.

Exemptions And Asset Protection

Exemptions play a nuanced role in Chapter 13 bankruptcy compared to Chapter 7. You are allowed to keep your assets and create a repayment plan. Exemptions impact the monthly payments of this plan, as payments are based on the value of non-exempt property.

In Chapter 13, you can calculate disposable income by subtracting living expenses from monthly income. The resulting amount is multiplied by the repayment plan's duration (36 to 60 months).

Deduct the value of exempt assets from your total assets to determine payments. Sometimes, an asset is only partially exempt if its value exceeds the exemption amount.

Debts Not Discharged Under Chapter 13

In Chapter 13 bankruptcy, you must repay some debts in full through your plan, while others can be partially paid with the remaining balance discharged at the end. However, certain debts are not discharged at the completion of the Chapter 13 plan:

• Debts resulting from intentional harm to another person or their property.
• Debts for death or personal injury caused by operating a vehicle under the influence of alcohol or drugs.
• Debts resulting from willful or malicious actions by the debtor causing personal injury or death.
• Debts for law violations, including traffic tickets.
• Most government-funded or guaranteed educational loans or benefit overpayments.
• Debts for alimony or child support obligations.
• Some taxes are not discharged.

If you are not sure how Chapter 13 bankruptcy works or how to initiate a Chapter 13 bankruptcy filing, contact us. We will guide you appropriately so that you can make an informed decision about filing for Chapter 13 bankruptcy.

Contact us now to schedule an appointment.