How Chapter 13 Bankruptcy Can Help You Manage Debt
If you are wrestling with burdensome debt and searching for a practical solution to reclaim financial control, Chapter 13 might be your lifeline. Jeppson Law, located in Kansas City, MO, is prepared to lead you through the intricacies of Chapter 13. We will help you answer the question: “Are you eligible for Chapter 13 bankruptcy in Kansas City, MO?” and guide you with your other bankruptcy concerns.
To make your reading easier, we offer a summary of this article:
- Chapter 13, designed for individuals with a steady income, restructures debts with a personalized repayment plan spanning three to five years.
- Particular requirements are needed for an individual to be eligible for Chapter 13 bankruptcy.
- Chapter 13 covers various types of debts in creating a repayment plan.
- Not all debts are dischargeable, and specific conditions or limitations may apply.
- Filing for Chapter 13 involves several steps that are much easier to manage with help from an experienced attorney.
- Bankruptcy may be a viable solution if facing overwhelming debt, foreclosure repossession, and many more reasons.
Within this article, we aim to unravel the complexities of Chapter 13 bankruptcy, providing a straightforward guide for regular folk to grasp the process. We also emphasize the importance of relying on the services of our law firm when navigating these legal complexities.
What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy serves as a legal tool to assist individuals in restructuring debts and creating a well-defined repayment plan. Chapter 13 enables debtors to preserve their property while aiming for debt resolution, unlike Chapter 7, which entails asset liquidation.
Created for those with a steady income, the essence of Chapter 13 lies in developing a personalized repayment plan spanning three to five years. This plan covers diverse debts, including mortgages, car loans, and credit card balances, into a single, more manageable monthly payment for the individual.
Am I Eligible for Chapter 13 Bankruptcy?
To know if you are eligible for Chapter 13 bankruptcy, you must meet the following criteria:
- Regular Income: Chapter 13 caters to individuals with a consistent income, be it from employment, business, or other reliable sources, forming the foundation for a workable repayment plan. Reliable sources of income can include disability checks, social security benefits, or a steady job.
- Debt Limitations: Limits on secured and unsecured debts are essential qualifiers for Chapter 13, subject to periodic adjustments. Your combined total of secured and unsecured debts should be less than $2,750,000 as of the date of filing for bankruptcy relief.
- Types of Debt: Chapter 13 accommodates various debts like mortgage arrears, car loans, and credit card debt, though surpassing specific limits on unsecured debts can impact eligibility. To ease your understanding, we have included a list in this article for debts covered or not covered by Chapter 13.
- Priority Claims: Addressing priority claims, such as taxes and domestic support obligations, is integral in the repayment plan to enable individuals to catch up over the plan period. Priority claims are granted special status by the law, and must be paid in full.
- No Disqualification: Disqualification within a particular time frame (typically 180 days) due to court order violations or previous case dismissal can prevent you from filing a Chapter 13 bankruptcy.
Seeking guidance from an experienced attorney is valuable for accurate eligibility assessment and effective navigation.
What Debts are Covered by Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is a versatile tool for restructuring and managing diverse debts. Here are the main categories of debts that can be exempted through Chapter 13:
- Mortgage Arrears: If you are behind on mortgage payments and facing foreclosure, Chapter 13 allows you to catch up on arrears throughout the repayment plan.
- Car Loans: Car loans can be restructured to reduce principal and interest rates, aiding in retaining the vehicle with more manageable payments.
- Credit Card Debt: Credit card balances and medical bills are typically included in the repayment plan, offering relief from these financial burdens.
- Medical Bills: Unpaid medical bills can be included in the repayment plan to relieve overwhelming healthcare-related debts.
- Personal Loans: Personal loans and lines of credit can be addressed, allowing for a structured repayment approach within Chapter 13.
- Priority Debts: Priority debts like taxes and domestic support obligations are incorporated into the plan, providing a means to catch up over time.
What Debts are Not Covered by Chapter 13 Bankruptcy?
Not all types of debts are dischargeable through Chapter 13, and some may have specific conditions or limitations. Here are some examples of debts that may not be covered or have limitations in Chapter 13 bankruptcy:
- Certain Taxes: While some tax debts can be included in a Chapter 13 plan, others (such as recent income tax obligations) may not be dischargeable.
- Domestic Support Obligations: Domestic support obligations, like alimony and child support, generally remain unaffected by Chapter 13 discharge.
- Student Loans: Student loans pose a challenge for discharge unless undue hardship is proven.
- Criminal Restitution and Fines: Debts for criminal restitution and fines are typically non-dischargeable, as are debts incurred after filing for Chapter 13 bankruptcy.
- Debts Incurred After Filing: Any debts incurred after filing for Chapter 13 bankruptcy may not be covered by the existing plan.
- Luxury Purchases: Luxury purchases and certain court judgments, particularly those linked to fraud or malicious activities, may also resist discharge under Chapter 13.
- Certain Court Judgments: Some court judgments related to fraud, willful and malicious injury, or other illegal activities may not be dischargeable in Chapter 13.
How Do I File for Chapter 13 Bankruptcy?
Filing for Chapter 13 bankruptcy involves several steps, and it is crucial to follow the process accurately. Below is a general guide on how to file for Chapter 13 bankruptcy:
- Credit Counseling: Before filing, take a credit counseling course from an approved agency. A completion certificate is necessary for initiating bankruptcy proceedings.
- Gather Financial Documents: Assemble documents detailing your financial standing, encompassing income, expenses, debts, assets, and recent tax returns. This information is critical for an accurate assessment.
- Complete Bankruptcy Forms: Collaborate with your attorney to answer essential bankruptcy forms, including the petition, schedules, and a proposed repayment plan. These forms provide a comprehensive overview of your financial situation.
- File the Petition: Your attorney will file the bankruptcy petition and accompanying forms with the local bankruptcy court, triggering an automatic stay that halts creditor actions against you.
- Payment Plan Confirmation: Attend a meeting of creditors with your attorney to present your proposed repayment plan. Creditors can voice objections or approve the plan during this stage.
- Confirmation Hearing: Attend a confirmation hearing, during which a bankruptcy judge reviews and then either confirms or modifies your repayment plan. You commence making payments according to the plan once confirmed.
- Financial Management Course: Complete a financial management course through an approved agency, a prerequisite for obtaining a discharge at the Chapter 13 plan’s conclusion.
- Complete Repayment Plan: Adhere to the terms of your confirmed repayment plan by making regular payments to the Chapter 13 trustee, who subsequently distributes payments to creditors according to the plan.
- Receive Discharge: Upon completing the repayment plan, you may receive a discharge of remaining eligible debts. This discharge provides relief from specified debts, offering a fresh financial beginning.
When Should I File for Bankruptcy?
Deciding when to file for bankruptcy is a significant and personal decision. Here are some indicators that it might be time to consider filing for bankruptcy:
- Overwhelming Debt: If you find yourself under unmanageable debt, wrestling with minimum payments, and besieged by constant creditor calls, bankruptcy could present a viable solution.
- Foreclosure or Repossession: If you risk losing your home through foreclosure or your vehicle through repossession, filing for bankruptcy, especially Chapter 13, can help you retain these assets by restructuring your debts.
- Continuous Late Payments: If you are consistently late on payments, accruing late fees and interest, and see no feasible way to catch up, bankruptcy may provide a structured approach to get back on track.
- Legal Actions and Judgments: If creditors have taken legal measures, leading to judgments, wage garnishments, or bank levies, filing for bankruptcy can stop these actions, providing an opportunity for a fresh start.
- No Improvement in Sight: If your financial situation hasn’t improved despite your best efforts, and there’s no foreseeable way to pay off your debts shortly, bankruptcy may be a realistic option.
- Medical Expenses: Unexpected medical bills can quickly accumulate, leading to financial distress. If medical debt is a significant burden, bankruptcy can offer relief.
- Loss of Income: A substantial loss of income due to job loss, reduced hours, or other factors, coupled with difficulties meeting financial obligations, may position bankruptcy as a necessary lifeline.
While Chapter 13 bankruptcy offers a structured approach to debt relief, the legal intricacies involved demand the skills of an experienced attorney.
Why Do I Need a Bankruptcy Lawyer in Kansas City, MO?
Hiring a bankruptcy lawyer in Kansas City, MO, such as from Jeppson Law, can be critical for several reasons:
- Legal Experience: Bankruptcy law is complex and varies by jurisdiction. Our experienced attorney comprehends federal and state bankruptcy laws, ensuring correct case handling.
- Tailored Advice: Our bankruptcy lawyer assesses your financial situation, determines the appropriate filing chapter (Chapter 7 or 13), and offers personalized advice based on your needs.
- Guidance Through the Process: Navigating bankruptcy can be overwhelming. Our lawyer guides you at every step, from eligibility evaluation to preparing and filing necessary documents.
- Protection from Creditors: Once hired, creditors must communicate with your attorney, not you. That eases stress and ensures your rights are legally protected.
- Negotiation with Creditors: Our skilled attorney negotiates with creditors for favorable terms in your bankruptcy plan, potentially reducing the total owed or lowering interest rates.
- Preventing Mistakes: Filing for bankruptcy involves extensive paperwork and strict deadlines. Our attorney helps avoid mistakes that could jeopardize your case or lead to dismissal.
- Court Representation: If court appearances are needed, our attorney represents you, which is valuable if you are unfamiliar with courtroom procedures and desire legal advocacy.
Even after a case has concluded, our bankruptcy lawyer can guide you in rebuilding credit, understanding dischargeable debts, and navigating the post-bankruptcy landscape.
Call Our Kansas City, MO, Bankruptcy Lawyer Today!
Are you eligible for Chapter 13 bankruptcy in Kansas City, MO? Understanding the nuances of this legal process is necessary for those pursuing financial relief. Jeppson Law is committed to leading you through the intricacies of Chapter 13, providing great assistance from evaluating eligibility to representing you in court.
With our experienced attorneys, you can confidently embark on the journey to financial recovery. Get a free consultation today when you avail our services for both Chapter 13 and Chapter 7 bankruptcy!