Chapter 13 offers individuals a number of advantages over liquidation under Chapter 7 bankruptcy protection. Perhaps most significantly, Chapter 13 offers you the opportunity to save your home from foreclosure. By filing under this chapter, you can stop foreclosure proceedings and you may then bring your past-due payments current over a reasonable period of time. It is important to note that you may still lose your home if the mortgage company completes the foreclosure sale under state law before your Chapter 13 petition is filed. You may also lose your home if you fail to make the regular mortgage payments after you file because under a Chapter 13 repayment plan, you must make all mortgage payments that come due on time. Most individuals are unaware that they may be able to discharge second and third mortgages in Chapter 13. If your home appraises for an amount less than your first mortgage balance, you may be able to strip off all inferior mortgages at the end of the plan through Chapter 13 protection. The second and possibly the third and forth mortgage is considered unsecured and treated like any other unsecured debt. You may only have to pay pennies on the dollar to remove the additional mortgage and the lender is paid pro rata along with the other unsecured creditors.
Another advantage of Chapter 13 is that it allows you to reschedule secured debts, other than a mortgage for your primary residence, and extend it over the life of the Chapter 13 repayment plan. This may lower your payments and Chapter 13 also has a special provision that protects third parties or co-signers who are liable with the debtor on their “consumer debts.” Chapter 13 is also useful to eliminate some IRS debt and to establish an affordable plan to pay IRS debt that cannot be eliminated. Chapter 13 acts like a consolidation loan where you make your planned payments to a Chapter 13 trustee who will then distribute your payment to your creditors. This is an advantage since you will have no direct contact with your creditors while under Chapter 13 bankrupt protection. Your plan is generally an interest-free repayment plan chosen by the courts and your creditors do not have to approve of the plan because the courts are in control. Once you file and are approved, you will have to start making payments within 30 to 45 days of filing for bankruptcy. To fulfill your repayment obligation, Robert Pflueger can arrange with the court for your payments to be withdrawn directly from your wages. If you are able to fulfill your obligations in the repayment plan in the time frame set forth by the courts, you may be offered a full plan discharge. This is an advantage of Chapter 13 bankruptcy over Chapter 7, where a full plan discharge is not available. While you are working under the payment plan, your creditors cannot collect more from you than what is outlined on the plan, even if they do not agree to it.
Unlike Chapter 7 bankruptcy, which only allows certain people to file, most consumers are allowed to file for bankruptcy protection under Chapter 13. According to Chapter 13 bankruptcy codes, no corporation or Limited Liability Corporations (LLC) are eligible however. The law states that a business owner cannot file in the name of a business but can only file the debts from the business that they are personally responsible for. Only sole proprietors (an individual doing business as) are eligible unless the owner of the business offers to buy all of the assets. In this instance, the owner then becomes responsible for all of the debt and once that occurs, the business is considered a sole proprietorship. Any individual, even if self-employed or operating an unincorporated business, is eligible for Chapter 13 relief as long as the individual’s unsecured debts are less than $360,475 and secured debts are less than $1,081,400. These amounts are adjusted periodically to reflect changes in the consumer price index. While Chapter 7 shuts down your business and Chapter 11 liquidates your business, in a Chapter 13 bankruptcy you can keep your business open while you are rebuilding it.
A further eligibility condition for Chapter 13 bankruptcy is that there must be no Chapter 13 bankruptcies in the last 2 years or no Chapter 7 bankruptcies in the last 4 years for the Chapter 13 bankruptcy filer. An individual cannot file under Chapter 13 or any other chapter if during the preceding 180 days, a prior bankruptcy petition was dismissed due to the debtor’s willful failure to appear before the court, willful non-compliance with orders of the court, or the debtor was voluntarily dismissed after creditors sought relief from the bankruptcy court to recover property upon which they hold liens. Another requirement from the 2005 Bankruptcy Act necessitates that all individual debtors who file bankruptcy on or after October 17, 2005 undergo credit counseling within six months before filing for bankruptcy relief and they must complete a financial management instructional course after filing bankruptcy. Robert Pflueger will file your Credit Counseling certificate with your bankruptcy petition and this is an important action because bankruptcy petitions filed without a Credit Counseling certificate may be dismissed. This can result in catastrophic consequences because it will allow your creditors a window in which to take collection action. Before filing for Chapter 13 bankruptcy, Robert Pflueger can direct you to an approved Credit Counseling agency to complete your requirements.
A Chapter 13 bankruptcy case officially begins with the filing of the bankruptcy petition. In Florida, there are three bankruptcy courts that cover various counties and depending on where you have your domicile or residence, you will file for Chapter 13 in the northern, middle, or southern Florida bankruptcy court. Each court has the same tasks but they are strategically situated to deal with all areas. Within approximately 15 days after your petition is filed, the court will send a Notice of Commencement of Case to your attorney and to all of the creditors listed in the bankruptcy petition. This notice will include important information such as the time, date, and location of the creditors meeting and the deadlines for claims and/or objections from creditors. Schedules containing information about your debts, assets, income, and expenses must be filed within 15 days after the case is commenced. These schedules often are filed along with the petition; but where an emergency situation exists, such as a pending foreclosure or repossession, they may be filed separately so that the petition can be filed immediately without waiting to collect the required information and documentation for the schedules. The 15-day deadline also applies to filing the Chapter 13 repayment plan.
In order to complete the Official Bankruptcy Forms that make up your petition, statement of financial affairs, and schedules, you must compile the following information:
Married individuals must gather this information for their spouse regardless of whether they are filing a joint petition, separate individual petitions, or even if only one spouse is filing. In a situation where only one spouse files, the income and expenses of the non-filing spouse is required so that the court, the trustee and creditors can evaluate the household’s financial position. You must also file a certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling; evidence of payment from employers, if any, received 60 days prior to filing; and a record of any interest the debtor has in federal or state qualified education or tuition accounts. You must provide a copy of your tax return or transcripts for the most recent tax year as well as tax returns filed during the case including tax returns for prior years that had not been filed when the case began.
When Robert H Pflueger files your Chapter 13 petition, an impartial trustee is appointed to administer your case. In some districts, the U.S. trustee or bankruptcy administrator appoints a standing trustee to serve in all Chapter 13 cases. The Chapter 13 trustee both evaluates your case and serves as a disbursing agent, collecting payments from you to make to your creditors. Filing the petition under Chapter 13 “automatically stays” (stops) most collection actions against the debtor or the debtor’s property. Filing the petition does not, however, stay certain types of actions and the stay may be effective only for a short time in some situations. The stay arises by operation of law and requires no judicial action. As long as the stay is in effect, creditors generally may not initiate or continue lawsuits, wage garnishments, or even make telephone calls demanding payments.