Chapter 13 Bankruptcy

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When is Chapter 13 a good option?

Chapter 13 is for someone with regular income, normally having fallen behind on monthly payments on cars, houses and other debts which are secured by collateral. It helps them make a repayment plan to get their debt under control. Chapter 13 bankruptcy lets you propose a plan to repay all or a portion of your debt in a three to five-year period through monthly payments.

The court will determine how long this period is. All bankruptcy payments are governed by your disposable income and the equity you may have in assets such as cars, houses, bank accounts, or other assets. Normally if your income is less than the median income level for Georgia, you have the option of a three to five year repayment plan. Below is the table for median income levels in Georgia.

In calculating income and expenses to determine the minimum payment required for individuals with income above the median level, the courts use a generic formula for determining expenses and income. This is called the “Means Test.” Social security benefits are excluded from the test. Any aid from the CARES Act is also excluded.

Generally, no repayment plan can extend beyond five years. However, under the CARES Act enacted March 27, 2020, debtors operating under a confirmed plan as of that date may extend their plan for up to seven years from the date the first payment was due under the confirmed plan. During this period, no debt collectors are allowed to bother you.

Benefits of Filing Chapter 13 Bankruptcy

Unlike Chapter 7, you are not looking at the possibility of liquidating your assets in order to pay off your debt. You could have the option of saving your home or car if you file for Chapter 13 bankruptcy and avoid having a foreclose on your home or car. When you file, foreclosure and repossession proceedings will cease. But do note that you may have to continue to pay your mortgage on your house directly to the mortgage company while you are in the process of Chapter 13 bankruptcy. Car payments are typically included in the Chapter 13 payments made to the trustee.

Something you may be pleased to know is that Chapter 13 bankruptcy lets you reschedule your secured debts and extend/pay them out over a period of time.that extends beyond your repayment plan. This can result in lower and more manageable payments.

How the Chapter 13 Process Works

Hopefully you will start your case with the help of one of our Georgia Chapter 13 bankruptcy lawyers. It begins when you file your petition with the bankruptcy court. The petition details your assets, liabilities, debts, income, and a listing of financial matters predating two years before the filing.

You will to attend credit counseling session via the computer or phone. The certificate of credit counseling must be attached to the petition. From there you will provide your proposed repayment plan. You will have a trustee working on your case and you will have to provide them with your tax returns for the last two years.

There are some costs with filing for Chapter 13 bankruptcy. There is a $313 fee for filing your case. You may be able to work with the court to pay this over a 120 day period after filing. There will not be more than four payments allowed to repay these fees, however, and it has to be totally paid off within 120 days after you file your bankruptcy petition. There may be some exceptions that grant you 180 days to pay back the fees, but it is something to discuss with one of our Georgia Chapter 13 bankruptcy lawyers.

You should be prepared to provide all information needed to the staff handling your case such as:

• A comprehensive list with addresses of all debts owed
• Who is loaning you the money, how much they loaned you and how often you pay these payments
• A comprehensive list of your assets, including house, cars, boats, deposit accounts, life insurance policies, etc.
• A comprehensive list of everything that you spend on a monthly basis including your utilities, taxes, medical care, food, housing, etc.