What is Chapter 13 Bankruptcy?
Nashville Chapter 13 Bankruptcy Lawyer
Chapter 13 bankruptcy can be a useful tool for those who are behind on their debts but who have a steady income and assets that make them ineligible for Chapter 7. Chapter 13 bankruptcy is a very common type of bankruptcy for people who are facing foreclosure or repossession. Once you file for Chapter 13 protection, the court will order a stay that prohibits your creditors or any collection agencies from contacting you further. Filing a petition stops the foreclosure process in its tracks and helps you to manage your finances once again with a more realistic repayment plan. The court will allow you to repay your debts over an extended period of time, usually 3 to 5 years with no interest.
This type of bankruptcy is available to any individual or sole proprietor. The length of time you will be allowed will depend on your income and the amount of debt you need to repay. Your payments are made to the Chapter 13 trustee who then distributes the payments to your creditors. If you successfully complete your payment plan as prescribed by the court your debts will be repaid and you will be released from any other dischargeable debts. While Chapter 13 bankruptcy will still affect your credit, because you do repay your obligations in full your credit will be easier to repair once the process is complete.
How does Chapter 13 work?
Chapter 13 comes in very handy for applicants trying to protect their property and valuable assets. Applicants are able to negotiate a new payment plan with their creditors and pay more manageable amounts over an extended period of time. Within 15 days after filing your bankruptcy petition, you must file a proposed debt plan that takes into account your income, your expenses, and your monthly payments to the creditors. Even though Chapter 13 protects against foreclosure, you must make timely payments on your mortgage even during the filing process otherwise the automatic stay may not be enforced and they may continue on with the foreclosure.
Who is eligible for Chapter 13?
Any homeowner facing foreclosure should be eligible to file a petition if they can show prove of a steady income that is high enough to make all their current living expenses and mortgage payments. Applicants are also required to attend a credit counseling session prior to filing. Unlike Chapter 7 bankruptcy, Chapter 13 has a cap on the amount of debt an applicant can have and if they exceed that, they may not be eligible. For filers there is a secured debt limit of $1,081,400 and an unsecured debt limit of $360,475. If this is the case for you, don’t lose hope! There are still other options of debt reorganization that you can pursue such as Chapter 11 bankruptcy. You will also be prohibited from applying if you had a previous Chapter 7, 11, or 12 bankruptcy in the last four years. In comparison with Chapter 7, Chapter 13 is a longer and slower process being that the repayment plans go anywhere from 3-5 years.
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If you are one of the many who have fallen behind on your mortgage payments, auto loans or credit cards bills due to the recent economic crisis in banking and real estate you may be running out of time. Perhaps you are being threatened with foreclosure or repossession due to your inability to keep up with your obligations. For answers to your questions and to find out what real solutions may be available you should speak with an experienced Nashville bankruptcy attorney at Cain & Associates, PLLC. We can help you each step of the way to prepare all the necessary documentation and answer all your questions. Contact our Nashville office and receive a free financial consultation to discuss the legal options you may qualify for.