|CLICK TO CONTACT RESOLVE LEGAL||(P) 206.624.01230((F) 206.624.85980 720 Olive Way, Suite 1000, Seattle, WA, 98101-25090|
CHAPTER 13 FAQ's
Who can file Chapter 13 Bankruptcy?
If you do not have regular income, you might qualify for a Chapter 7 bankruptcy.
If your debt is too high, you might qualify for an individual Chapter 11 bankruptcy case.
What is a Chapter 13 and how is it different from a Chapter 7?
The basic difference between Chapter 7 and Chapter 13 is that under Chapter 7 a trustee sells any propery of the debtor that is not exempt to pay creditors. In a Chapter 13, the debtor makes payments to a Chapter 13 trustee over time, and those payments go to pay the creditors. Is Chapter 13 right for me?
As a practical matter, under Chapter 7 the debtor may not lose much, if any, property, since most household goods and a reasonable amount of assets are considered exempt. But if there are assets that are not exempt or have too much value, the trustee will sell them and pay the creditors. In a Chapter 13, the debtor usually keeps all their property and pays off all or a percentage of their debts.
Will I lose my house?
Many times, a Chapter 13 can stop a foreclosure and allow you to keep your house. You will have to be able to make the mortgage payments. Any past due payments can be "cured" over the life of a plan.
Will I lose all of my belongings?
Can I stop bill collectors from contacting me?
As soon as a creditor becomes aware that you have filed for bankruptcy, the creditor must stop all efforts to collect the debt. If there is an ongoing garnishment or foreclosure, you should tell us so that we can contact the creditor immediately. A creditor wishing to proceed with action against the debtor or its property must obtain permission from the Court. If the creditor continues to try and collect once they become aware of the bankruptcy, they may be liable for court sanctions, damages and attorneys fees. Find out more here.
I am married; does my spouse have to file bankruptcy too?
Do I have to fill out forms?
When you sign your bankruptcy petition and schedules, you do so under penalty of perjury. At your initial court appearance, you will have to testify, under oath, that the list of assets and property are complete. The consequences of failing to list assets or debts can be very serious.
Do I have to go to Court?
An attorney from Resolve Legal will attend the hearing with you.
After this hearing, you will, most likely, not have to attend any other Court hearings.
What is a Chapter 13 plan?
The Chapter 13 Plan must last a minimum of thirty-six (36) months and can last for a maximum of sixty (60) months.
What is a “regular source of income”?
- regular wages or salary
- income from self-employment
- wages from seasonal work
- commissions from sales or other work
- pension payments
- Social Security benefits
- disability or workers' compensation benefits
- unemployment benefits, strike benefits, and the like
- public benefits (welfare payments)
- child support or alimony you receive
- royalties and rents
- gifts of money from relatives or friends, and
- proceeds from selling property, especially if selling property is your primary business
What is this Chapter 13 trustee?
How much of a debtor's income must be paid to the Chapter 13 trustee under a Chapter 13 plan?
You will begin making payments to the Chapter 13 trustee within 30 days after the debtor's plan is filed in the court, and the plan must be filed with the court within 15 days after the case is filed. The payments must be made regularly, usually on a weekly, biweekly, or monthly basis. If you are employed, the Chapter 13 trustee will usually require the payments to be made by the debtor's employer, via a wage deduction. Otherwise, the payments can be made directly by you.
What if I am temporarily unable to make my Chapter 13 payments?
If it appears that your inability to make the required payments will continue indefinitely or for an extended period, the case may be dismissed or converted to Chapter 7.
What if I later decide to discontinue the Chapter 13 case?
You have the right to either dismiss a Chapter 13 case or convert it to Chapter 7 at any time for any reason.
What happens if my creditor has collateral securing the payment of debt?
In Chapter 13 cases, secured claims are handled in one of two basic ways.
The first, is where past due payments on secured debts are paid, in equal installments, from your monthly bankruptcy plan payments . Your future payments (payments that come due after filing bankruptcy) are paid either from your monthly bankruptcy plan payments, or directly from you to the creditor. When the bankruptcy plan has terminated, you remain obligated to make any payments remaining due on the secured debts.
The second method is called the "strip-down/stretch-out/cram-down" method. This method is used either when the collateral is worth less than the amount of the debt, or when the number of payments left on a debt is less than the length of the plan. You can strip-down the creditor claim to the value of its collateral, stretch-out the payments to 36 months and pay the present value of the claim at a reduced interest rate ("cram-down "). The ability to "refinance" your secured loans through this second method permitted by Chapter 13 bankruptcy lets you reduce the monthly payments and is sometimes the only way to have enough cash flow to keep your property.