Jon Arnold asked:




When a consumer is considering bankruptcy, the usual way to file it is to use Chapter 7 bankruptcy but in some cases it makes more sense for the consumer to file under Chapter 13 bankruptcy law. All bankruptcies, regardless of which chapter is filed, are done under the jurisdiction and supervision of the federal bankruptcy court.

The consumer who files under Chapter 13 bankruptcy protection is shielded and protected from creditors who might otherwise file a separate lawsuit against the consumer to collect the outstanding debt owed. When a consumer files Chapter 13 bankruptcy, the debt from all creditors is consolidated into one debt, it drastically reduces and sometimes even eliminates interest payments, and in almost all cases, it lowers the total amount of money that the consumer needs to lay out each month.

One of the beautiful parts about this is that after you have notified the creditors that you have filed bankruptcy, Chapter 13 or any other chapter, they can no longer call you or send you threatening letters, which only serves to increase your stress level anyway. You are recommended to keep a notebook near your phone and note which creditors you told about your bankruptcy, noting date, time, creditor and the name of the person you talked with. If they persist in calling after being notified that you have filed bankruptcy, they are in violation of federal law and you may have the option at that point of bringing a countersuit against them for that violation. Believe me, they are well aware of that and do not want to risk it.

Now by looking at this explanation, if you have been doing research into your bankruptcy options, you may have noticed that Chapter 13 bankruptcy sounds very similar to the process of using a debt consolidation service. You are right, but there are some very distinct advantages and disadvantages of each. For example, a debt consolidation service charges a small fee for their services, where the total amount of that fee would probably be a bit more than you would pay for your Chapter 13 bankruptcy filings and legal fees. But then again, with a debt consolidation service, your credit score is maintained and the fact that you are using a debt consolidation service is frequently not even visible on your credit reports, whereas a bankruptcy filing is a huge neon sign on your credit reports for the next 7 to 10 years. Although everyone’s situation is different, it would seem that a debt consolidation service, even though costing a bit more, would have much fewer long term negatives. You should really compare both options with a good bankruptcy lawyer so you can make an informed decision about what is best for your circumstances.

So the bottom line is that a chapter 13 bankruptcy gives the consumer the opportunity to pay off their financial obligations in a timely manner. The amount that the consumer will pay each month is determined by the bankruptcy court and will be an amount determined by a close examination of the consumer’s sources of income. A trustee is appointed by the court and the consumer’s check each month is given to that trustee. In most cases, this must be a certified check or cashier’s check, so it is going to be a bit more hassle to get that kind of check each month and get it to the trustee.

If you are considering bankruptcy as a consumer, you can either file Chapter 7 or Chapter 13. But especially with the recent changes in the bankruptcy laws, filing bankruptcy is no longer a “do it yourself” process unless you are willing to get very familiar with the bankruptcy laws. Making a mistake in the complex procedures that have been established could easily end up costing you more than a bankruptcy lawyer’s fees.

http://rexkaufman6721.webs.com/apps/blog/show/867595-using-chapter-thirteen-bankruptcy-to-stop-foreclosure

Andrew Stratton asked:




Bankruptcy lawyers are legally licensed practitioners that assist individuals or businesses with the legal proceedings involved in filing for the same. They begin by guiding their client through the necessary steps in choosing the appropriate filing option, and then continue to assist the person with related paperwork, dealings with past debt collectors, keeping them informed of corresponding state laws. The most common type filed in the United States is Chapter 7, which is relatively quick and simple, but Chapter 13 is quite common if the debtor is employed or makes money some other way.

Chapter 13 is a type of financial rehabilitation designed for individual households with a steady income to repay all of their debt in specific payment plans, and it is also referred to as the Wage Earner Bankruptcy.

Chapter 13 allows the individual to keep possession of all assets, but the person is required to continue paying on his or her debts over time. This payment process usually lasts about three to five years. The amount of payment is dependent on various factors within the situation, including the debtor’s income and personal living expenses.

Bankruptcy lawyers handle the establishment of such payment plans, and make decisions in accordance with the law, which varies state by state. If their client’s monthly income exceeds the corresponding state’s median income, the payment arrangement will usually be set to exist for five years. If their client’s income drops below their state’s median earnings, the arrangement will be set for three years unless the federal court system states otherwise.

Although having the ability to start fresh financially is generally a huge relief for people struggling with debt collectors and monetary balance, filing for bankruptcy (regardless of the chapter) also has its negative aspects.

The most obvious disadvantage is the existence of such a drastic action recorded on the debtor’s credit report for up to ten years. The individual must seek permission from the court of the same if he or she wishes to obtain extra credit while the case is pending. Also, a person involved in actual bankruptcy proceedings will be less likely to be granted loans from a creditor as long as the information remains with the Credit Bureau. Lawyers that specialize in elimination of debt and related legal proceedings can help relieve their client of the stress of foreclosures, wage garnishing, harassing creditors, liens, and repossessions associated with financial crisis, while informing their client on both the benefits and possible negative results of Chapter 13.

http://rexkaufman.vox.com/library/post/using-chapter-13-bankruptcy-to-stop-foreclosure.html

Michael Russell asked:




Chapter 13 bankruptcy is provided for the wage earner who can use his income to pay his creditors over a specified time period. Chapter 13 is a reorganization of the debt owed to creditors with a payment schedule set up whereby the wage earner makes timely payments to the creditors over a three to five year payment period.

The court may not allow a filing of chapter 13, depending on whether or not a person’s income is sufficient to repay some or all the debt. It has to be established with the court that the income is steady income and is not too low. Thus, chapter 13 is not suited for everyone.

Also, there is a limit to the amount of debt a person is carrying to qualify for filing a chapter 13. Total secured debt must not exceed $922,975 and total unsecured debt must not be more than $307,675. Secured debt is backed up with collateral such as a home or a car; while unsecured debt is balances on credit cards, signature loans, medical bills, etc.

Before you can proceed with filing a chapter 13, you are required to complete a course in personal financial management. This credit counseling course has to be approved by the court trustee. There is a fee for this course, but if you are unable to pay, you will receive the counseling free of charge.

The court will determine how much of your debt you will repay and you must begin those payments within thirty days after filing. These payments are usually made to the bankruptcy trustee to be forwarded on your creditors. The court may require these monthly payments be automatically deducted from your wages and sent to the trustee. Three percent to ten percent of each monthly payment is collected by the trustee as their commission. It is absolutely imperative that these monthly payments be paid and be paid on time.

Under chapter 13, there are certain debts that must be paid in full. These include child support, alimony and some tax obligations. These debts are non-dischargeable and must be paid one-hundred percent.

Bankruptcy law is a federal law; however, there are state laws pertaining to bankruptcy, so specific rules governing bankruptcy depends on the state of residence and filing.

The purpose of chapter 13 is to give a person a chance for a fresh start financially. It gives them protection from creditors by placing a hold on all asset and debt collections and provides the court time to work out a legal judgment that is accepted by all parties. However, there are consequences of bankruptcy in the form of poor credit and having to pay higher interest rates because of the bankruptcy on the credit report. Thus, bankruptcy filing should be thought through seriously and advice should be sought through an attorney.

There are alternatives to bankruptcy such as debt consolidation, out of court settlements or to just simply do nothing. If you have little income and property, then you are ‘sue-proof’, which means if anyone were to sue you, they wouldn’t be able to collect anything anyway because you have nothing they can take. The law provides they cannot take your basic necessities such as clothing, food, household furnishings, etc. Most creditors will not bother suing someone knowing there is nothing for them to get. Instead, they will write off the debt, which does go on your credit report, but will be removed after seven years.

It’s important to weigh your options before making a final decision on whether to file a bankruptcy.

http://www.zimbio.com/chapter13bankruptcynow35/articles/3/Chapter+Thirteen+Bankrupcy+Rules

Steve Bingman asked:




In bankruptcy Chapter 13 mortgage foreclosure is either stopped or at least temporarily avoided.
Here’s how.

First, just in case you are not familiar with a Chapter 13 bankruptcy, it is a bankruptcy court approved payment plan where the debtor (the person filing bankruptcy) pays a bankruptcy trustee each month and then the trustee pays the debtor’s creditors.

There are several aspects of a Chapter 13 bankruptcy that work to help people facing mortgage foreclosure. The first aspect is actually applicable to all bankruptcies. It is called the “automatic
stay”.

By law, whenever anyone files bankruptcy, regardless of the type of bankruptcy, there is an immediate “automatic stay” (automatic temporary stopping) of most civil proceedings against the person filing bankruptcy. What this means is that if someone is facing mortgage foreclosure and the person files bankruptcy, the mortgage lender has to immediately stop its’ foreclosure action until it gets permission for the bankruptcy court to proceed.

In a Chapter 13, the bankruptcy court will not lift the “automatic stay” and grant the mortgage lender permission to proceed with a foreclosure until the debtor (the person filing bankruptcy) fails to make his payments to the bankruptcy trustee. As long as the debtor pays the monthly payments to the trustee and pays his regular mortgage payments, the “automatic stay” will remain in force and the mortgage lender can not do anything.

The second aspect of a Chapter 13 that works in favor of people facing foreclosure is that it allows a debtor to pay mortgage arrearage over time, normally 3 to 5 years. In most foreclosure cases, a person has not paid his monthly mortgage payment for several months and the mortgage lender demands full payment of the delinquent monthly payments (arrearage) in lump sum before the lender will consider stopping foreclosure. Most people cannot pay the lump sum.

In a Chapter 13 bankruptcy, a debtor can pay the arrearage over time. He does not have to pay it all at one time. Spreading the lump sum over time means paying smaller monthly payments until the total arrearage is paid. A creditor can object to the amount to be paid each month towards the arrearage, but once the bankruptcy court approves the payment plan, the creditor can not do anything except take the payments.

A third aspect of a Chapter 13 bankruptcy that helps people facing mortgage foreclosure is that unsecured creditors may be paid a portion or all of what is owed to them. What this is really doing is reducing the amount of debt that a person has to pay back each month. By paying unsecured creditors less each month, there is more money available with which to pay a secured creditor such as a mortgage lender. Therefore, it should be easier for a debtor to pay his monthly mortgage payment.

This is general information. If you need specific information or have any questions of any nature whatsoever, talk with a lawyer licensed in your state.

This article may be republished, but the wording must not be changed and the author links must
remain active.

http://rexkaufman.vox.com/library/post/the-rules-of-chapter-13-bankruptcy.html

Roilee Mandeville asked:




A cheap Chapter 13 bankruptcy attorney may be able to provide you with the help you need to get your finances under control. The economy has been tough on everyone. Some people have gotten into money troubles and the only answer seems to be bankruptcy. Chapter 13 bankruptcy is more of a repayment option than a clean sweep.

Understanding Chapter 13 Bankruptcy

Chapter 13 bankruptcy is a chance for you to adjust your debts. You can keep your property and pay off what you owe over a set period of time — usually three to five years. It is set up for those filers with regular income that have the ability to make payments. You and your Chapter 13 attorney will work together to come up with a repayment plan. The repayment may cover all of your debts or only part of your debts. The repayment period cannot be longer than five years. During the Chapter 13 bankruptcy repayment period creditors cannot start or continue any collection efforts. Foreclosure proceedings can be stopped by filing for Chapter 13 bankruptcy. The monthly payments for the mortgage must still be paid on time during the Chapter 13 bankruptcy plan. The process may cure any delinquent payments on the mortgage. Chapter 13 acts as a consolidation loan for debtors. It takes all of the different debts and puts them into a payment plan. A trustee of the court collects the payment and then distributes payments to individual creditors. You will have no direct contact with the companies or people that you own money to that are covered under the Chapter 13 bankruptcy. Chapter 13 will require that you file a list of all of your assets and liabilities, your income and monthly expenses, copies of tax returns, any contracts and also a statement of your financial affairs. You will be required to get credit counseling before filing for bankruptcy. The counseling needs to be completed 180 days before filing. There are fees involved with filing Chapter 13 bankruptcy above those paid to your bankruptcy attorney. You will be responsible for a case filing and an administrative fee. These fees will need to be paid to the court when the bankruptcy is filed. The court can give permission to pay the fees in installments but those installments have to be paid in full no later than 180 days after the petition is filed. Finding the right Chapter 13 bankruptcy attorney can be one of the most important steps to get your financial troubles under control. Finances can be one of the biggest causes of stress. Choosing a cheap Chapter 13 bankruptcy attorney that you can trust and that will have your best interests in mind will help make this tough time just a little easier.

http://chapter13bankruptcynow68.wetpaint.com/page/Chapter+Thirteen+Bankrupcy+Rules+%2830%29

Rocco Beatrice asked:




Prior to filing for bankruptcy you should consult with a lawyer regarding changing laws. The newest bankruptcy laws went into effect during 2005 and have made the filing process more difficult and expensive. A new provision to the bankruptcy law stipulates that a person must meet with a credit counselor and attend money management courses before their debt is discharged.

If you are contemplating filing for bankruptcy you should be aware there are two types of bankruptcy, Chapter 7 and Chapter 13, and each has its advantages and disadvantages. You should also familiarize yourself with the difference between secured and unsecured debt, as this will help you to protect your most valuable assets during bankruptcy.

WHAT IS CHAPTER 7 BANKRUPTCY?

Chapter 7 bankruptcy is intended to give people a fresh start. Assets are liquidated and used to pay creditors, although if you do not have assets of real value there is a chance to have your debt removed without giving much to the credit card companies. The new law makes filing for Chapter 7 more difficult because if your income is above your state’s median, and a judge determines you are financially able to pay at least twenty-five percent of the unsecured debt you will not be allowed to file.

WHAT IS CHAPTER 13 BANKRUPTCY?

You can make an appeal to the court that you have special circumstances, such as a natural disaster or severe illness, which further prevents you repaying the debt but most lawyers at this point will advise you to consider Chapter 13 bankruptcy. Chapter 13 bankruptcy puts you on a repayment plan with the creditors for a period of at least five years. The interest rates are often much lower than the original debt, and you are not responsible for debt unless it is specifically stated in your repayment plan. Under the new law courts will apply pre-set standards determined by the IRS to compute how much money you should allocate towards housing and food, and how much money you should have left to pay off your debt.

WHAT IS SECURED DEBT?

Once you and your lawyer have determined how you will file for bankruptcy, you should begin itemizing your assets and labeling your debt as secured and unsecured. Secured debt is credit given to you based on the value of the property you bought, such as a car loan. Should you fail to make payments the creditor with a secured interest in the property may have the item seized, and if the item is now worth less than your debt the creditor may sue you to make up the difference.

WHAT IS UNSECURED DEBT?

Unsecured debt is credit given to you solely on your promise to repay at a later date. An excellent example of unsecured debt is a credit card. Failure to pay unsecured debt may cause the creditor to obtain a judgment against you, and once this happens there is no hope of protecting your assets until your debt has been settled.

A creditor may obtain a judgment against you if your debt has remained unpaid for a long period of time, the balance of the debt is very high, or a combination of both. Once a judgment is obtained you are forced, by law, to pay back the debt you owe. To achieve this goal the creditor may request TO garnish your wages or even put a lien on your house to satisfy the debt.

HOW TO ITEMIZE YOUR ASSETS TO PAY DOWN DEBT

When itemizing your assets you should consider the value of your property in terms of what you could sell it for. Some debts such as your mortgage and taxes will not be absolved after you file bankruptcy, and you may consider selling some of your assets to pay down on these debts. Once you have taken stock of your assets, you can determine which of these assets are considered exempt property and untouchable by creditors.

Some states have very liberal homestead exemptions which allow you to keep a certain amount of your equity which will allow you to rebuild after declaring bankruptcy. States such as Florida and Texas allow you to keep all the equity in your home, whereas states like Alabama only allow you to retain the first $5,000. In states with more liberal homestead exemptions it may be to your benefit to use liquid assets to pay down on your equity. You can also refinance the equity from your homestead exemption and use the money to pay down on your unsecured debt.

OTHER LEGAL OPTIONS TO PROTECT YOUR ASSETS DURING BANKRUPTCY

Other legal options for protecting your assets during bankruptcy are making annual contributions to your IRA or other pension plan. It is important to consult with an attorney to make sure your pension plan complies with federal standards for bankruptcy exemption before you move any funds from existing accounts. You may also tie up money by purchasing additional life insurance, obtaining an offshore annuity, or by gifting certain assets.

If you choose to transfer ownership of your assets, make sure this transfer is permanent since you are taking an oath when you file bankruptcy that you have accurately presented all of your assets for consideration in repaying debt. Your actions within the last ninety days before you file for bankruptcy will be highly scrutinized in court, and any suspicious activity may result in a denial of your case.

http://rexkaufman6721.xanga.com/700025422/using-chapter-thirteen-bankruptcy-to-stop-foreclosure/

Dan Johnson asked:




When consumers contemplate the option of bankruptcy generally, the remedy they are specifically referring to is chapter 7 bankruptcy. The effect of the filing is to discharge someone saddled with debt from having to pay debts no longer secured with a valid lien. It also has the added benefit of serving as a court order to creditors (or their collection agencies) to stop hassling you through telephone calls, letters, and personal contact in an effort to get you to pay the debt. But what, in effect, does that mean for you the borrower?

Chapter 7

Filing for chapter 7 bankruptcy does not mean that immediately all of your debts are eliminated in their entirety. Rather, secured debt must be still be dealt with. It does mean, however, that commonly unsecured debts like credit card bills and medical expenses do not have to be paid back. But getting off the hook here does not come without costs. Rather, filing chapter 7 often means the necessary liquidation (selling off) of most of your personal property. While there are limitations to what can be confiscated by creditors, (such as your home under the homestead protection), expect that creditors will sell off most of your valued possessions to pay part of your debts to them. In addition, your credit rating will be devastated by this filing. In filing chapter 7 bankruptcy, you have essentially proclaimed to the world that you are no longer worthy to be trusted with future credit. That plays out practically insofar as it becomes virtually impossible to get a mortgage for a new home, a car loan, a credit card, and even limits very small forms of credit like appliance financing and at times payday loans. Because of the many drawbacks of filing for chapter 7 bankruptcy, many individuals in need of debt relief look for other options.

Chapter 13

One such option is chapter 13 bankruptcy. Chapter 13 filing means quite simply that you are restructuring your debt by negotiating with your creditors and establishing a plan to pay them off over the course of three to five years. So, this is a formal declaration that you will and have worked with creditors so that they will get their money, only at a slightly slower rate than they might have wanted. By promising to pay off your debts, you are allowed to keep valuable personal property such as your home and car. In a similar way, taking this step can limit some of the damage to your credit score that is incurred with filing for Chapter 7 as opposed to Chapter 13. Typically the arrangement reached with creditors is to have you pay your regular monthly payments, plus an additional amount that over time allows you to get caught up on your payments over time.

There are both benefits and costs to whichever bankruptcy approach you decide to take. On the one hand, filing Chapter 7 offers you the freedom to be rid of the heavy debt that is currently hanging over you, while Chapter 13 offers you only the chance to restructure that debt to be more manageable. But on the other hand, filing Chapter 7 also means the liquidation of almost all your valuables as well as the total devastation to your credit rating, whereas filing Chapter 13 allows you to keep many of your possessions while keeping your credit score intact.

http://rexkaufman6721.tripod.com/chapter13bankruptcynow12/index.blog/1903264/using-chapter-thirteen-bankruptcy-to-stop-foreclosure/

john L asked:


For lack of a better term i was forced to take out a mortgage last year on my home that was paid for. The terms and percentages were awful but thats besides the point.

My income at the time was sufficent to pay my bills and the mortgage.

I ran a successful business for a little over two years until 4 months ago when things went downhill. My mortgage payment is more than most people make in my area in 2-3 paychecks and now im unemployed with a SMALL list of other monthly bills besides the mortgage. I do have about $40k in other unsecured debt from the business and other unsecured creditors from when i was young that i never took care of.

I have thought about bankruptcy, chapter 13 is a no-go mostly because i cant afford the mortgage payments now so why would i waste my time with a 13?Otherwise it could work,but otherwise i dont really need a bankruptcy if were not including the house mortgage because i could just set up monthly payments with my creditors at a small payment.
7 minutes ago – 3 days left to answer.
my monthly expenses are slim so im not worried about that.

My problem seems to stem from my home, i have about 40k worth of equity in a 117k home.

With that kind of equity, it really does not make sense to file a chapter 7 because in my state you lose all equity besides 5k no matter what.

It really doesnt make sense to do a 13 because as already stated i cant afford the payments now,much less the payments to all my creditors plus the mortgage.

And the only other options are selling, of which is not really an option because foreclosure has already been initiated.

Or a deed in lieu of foreclosure, but then im giving them all of my equity for “free” although the foreclosure would likely not show up on my credit report and i could begin to repair the other damage.It would be faster to do this than to wait 10 years for a BK to come off the credit or 7 years for a foreclosure to come off.

OR just let it be foreclosed on……thats not appealing at all ofcourse.
ADVICE?

alphagreen asked:


I made a call to a bankruptcy lawyer for my husband. Besides the attorney fees, he mentioned paying $800.00 per month for 5 years. What for? I thought the whole point of filing BK was to eliminate paying. That comes to $50,000!!!

Anyone have information to confirm or help better define Chapter 13 for me? Apparently I don’t have a full understanding. It sounds just like a debt consolidator.

shadowboat asked:


if i agree to make payments each month.. how much of that am i left with?