CHAPTER 13 BANKRUPTCY DEBT RELIEF

Chapter 13 bankruptcy, often referred to as "wage earner's bankruptcy," provides an avenue for individuals with regular income to create a plan to repay all or part of their debts. Unlike Chapter 7, which involves liquidation of assets, and Chapter 11, which is typically for businesses, Chapter 13 allows debtors to keep valuable assets while catching up on missed payments over time. It is a complex but often advantageous form of bankruptcy, and understanding its legal framework, benefits, and application process is crucial for any debtor considering this route.

Legal Framework for Chapter 13 Bankruptcy

Chapter 13 is governed by the United States Bankruptcy Code, specifically Title 11. This chapter allows individuals with regular income to develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years, depending on their income level.

To qualify for Chapter 13 bankruptcy, the debtor must have regular income and disposable income to apply towards their Chapter 13 payment plan. In addition, the debtor's unsecured and secured debts must fall within limits specified by the bankruptcy code. As of 2021, these limits were $419,275 for unsecured debts, and $1,257,850 for secured debts. These limits are adjusted periodically to reflect changes in the consumer price index.

The law provides that the debtor can keep all of their property, whether exempt or nonexempt, as long as the Chapter 13 repayment plan is approved by the court. In most cases, the repayment plan will require payments on the value of non-exempt property and any disposable income the debtor has.

Provisions Under Chapter 13 Bankruptcy

A Chapter 13 bankruptcy is beneficial for those who have fallen behind on their mortgage or car loan payments. It can halt foreclosure or repossession actions, allowing the debtor to gradually make up missed payments over time. Further, it can also provide a mechanism to strip off or cram down certain secured debts, potentially saving a debtor significant money.

The most significant aspect of Chapter 13 bankruptcy is the repayment plan. The debtor, with the help of an attorney, creates a plan to repay the creditors in part or in full over a three- to five-year period. This plan is submitted to the court and the bankruptcy trustee for review. 

Once the court approves the repayment plan, the debtor makes regular payments to the bankruptcy trustee, who then distributes these payments among the creditors as outlined in the plan. This allows the debtor to make manageable payments and retain valuable assets.

At the end of the payment plan, most types of unsecured debt remaining are discharged, meaning they don't have to be repaid. Some types of debt, however, such as child support, alimony, certain taxes, and student loans, generally cannot be discharged in bankruptcy.

Steps Involved in Filing for Chapter 13 Bankruptcy

The process of filing for Chapter 13 bankruptcy involves the following steps:

1. Credit Counseling: As with other types of bankruptcy, individuals who plan to file for Chapter 13 must complete a credit counseling course from an approved agency within 180 days before filing.
2. Filing the Bankruptcy Petition: The debtor begins the Chapter 13 process by filing a petition with the bankruptcy court in their district. This includes schedules of assets and liabilities, a statement of financial affairs, and schedules of income and expenses.
3. Payment Plan: Along with the petition, the debtor must file a proposed repayment plan. This details how the debtor will pay each of their debts and over what period.
4. Automatic Stay: Once the bankruptcy petition is filed, an automatic stay goes into effect, halting most collection activities.
5. Trustee and Creditors Meeting: The court appoints a trustee who will oversee the case. The trustee will hold a meeting of creditors where the debtor answers questions about their financial situation and the proposed payment plan.
6. Plan Confirmation: After the meeting of creditors, the court will hold a confirmation hearing to decide whether the repayment plan is feasible and meets the standards of bankruptcy law. If approved, the debtor makes payments to the trustee, who distributes the funds to the creditors as set out in the plan.
7. Debt Discharge: After all required payments are made, the remainder of the unsecured debts is discharged.

Chapter 13 bankruptcy offers debtors with regular income a way to retain their property and reorganize their debts into a manageable repayment plan, providing much-needed financial relief while upholding their obligations to their creditors. The process is complex and legally intricate, requiring careful planning and professional legal guidance. But with the right approach, Chapter 13 bankruptcy can be an effective tool for overcoming financial challenges and paving the way for a more stable financial future.

Snable Stevenson & Silva Can Help You to Recover

Navigating the complexities of Chapter 13 bankruptcy can be a daunting task. It requires a profound understanding of the relevant legal processes and financial restructuring strategies. At Snable Stevenson & Silva, we possess both, and are well-equipped to guide our clients effectively through each step of a Chapter 13 bankruptcy filing.

Proficient Understanding of Bankruptcy Laws

Our team of experienced lawyers is well-versed in the intricacies of bankruptcy laws, especially Chapter 13. With our comprehensive knowledge and extensive experience, we can analyze your financial situation from a legal perspective and determine the best course of action. Our nuanced understanding of the law also allows us to prepare robust repayment plans that comply with legal requirements and are likely to be approved by the court.

Tailored Repayment Plans

Every client's financial situation is unique, and so should be their Chapter 13 repayment plan. Our attorneys dedicate ample time to thoroughly analyze your income, expenses, and debts. Using this information, we can create a realistic and manageable repayment plan tailored to your individual circumstances. This personalized plan ensures that you can repay your debts over time while still meeting your ongoing financial obligations.

Protection of Your Interests

Our primary objective is to protect your interests and rights. Chapter 13 bankruptcy provides an opportunity to save your home from foreclosure, your car from repossession, and possibly to reduce some of your debt obligations. We will help you leverage these benefits to the fullest extent. Our team will work tirelessly to prevent any unlawful creditor harassment and ensure that the automatic stay is respected.

Skilled Negotiation

Negotiations with creditors form a crucial part of the Chapter 13 process. Our seasoned lawyers are skilled negotiators who can advocate for your interests effectively. Whether it's objecting to a creditor's claim, negotiating the terms of the repayment plan, or arguing for the plan's confirmation in bankruptcy court, we bring a strong and persuasive voice to the table.

Guidance Throughout the Bankruptcy Process

Filing for Chapter 13 bankruptcy involves a series of complex steps, from attending mandatory credit counseling to participating in the meeting of creditors and confirmation hearing. We provide guidance at each step, ensuring that you're prepared and well-informed. Our attorneys will be with you at every hearing, ready to represent and support you.

Post-Confirmation Support

Our commitment to your financial recovery doesn't end with the confirmation of your repayment plan. We remain at your side throughout the execution of your plan, offering advice and assisting with any issues that arise. If your financial situation changes during the repayment period, we can help you seek a plan modification.

Maintaining Open Communication

At Snable Stevenson & Silva, we believe in maintaining transparent and open lines of communication with our clients. We take the time to explain the process, answer questions, and keep you updated about your case's progress. We're always just a call or email away, ready to provide the support you need.

Chapter 13 bankruptcy can be a powerful tool to regain control of your finances, but it requires expert navigation. With our legal team at Snable Stevenson & Silva by your side, you can move confidently through the process. Our extensive experience, deep understanding of the law, and commitment to client success make us uniquely positioned to help you achieve a fresh financial start.

Contact our Birmingham, Alabama Bankruptcy Lawyers Today for Legal Help

Are you or your family overwhelmed with debt? Contact Snable Stevenson & Silva for immediate legal assistance and advice. You might be eligible for one or more bankruptcy options, or possibly for other forms of debt relief. Our qualified Alabama bankruptcy lawyers can help you determine the best course of legal action and help to get you on a path to financial recovery.

We offer a free case evaluation and consultation. Contact our bankruptcy law office in Birmingham, Alabama to schedule yours today. There’s often a limited amount of time to act, so give us a call to get started today.