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Chapter 13 Bankruptcy Attorneys in Wooster, Akron, Canton, & Dover/New Philadelphia

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What is Chapter 13 Bankruptcy?

Chapter 13 is a form of bankruptcy that allows for adjustment of debts for an individual with regular income. A debtor can keep property and work out a plan to pay off debts over time. After the obligatory repayment period, remaining debts are often discharged, giving the debtor a clean slate to begin rebuilding financial stability. Like chapter 11, chapter 13 bankruptcy requires that the petitioner submit a reorganization plan to the court, but unlike chapter 7, assets can be retained.

Who Can File for Chapter 13?

Individuals. Chapter 13 is open to individual debtors whose unsecured and secured debts are under a predetermined threshold. For debtors who fail the chapter 7 means test because of higher income levels, but are still finding it a hardship to address their financial commitments, chapter 13 bankruptcy is often their best option. Debtors must have regular, predictable employment and earned wages in order to set up an effective repayment plan.

Sole proprietors. Chapter 13 bankruptcy is almost exclusively filed by individuals, or jointly by spouses. In the case of a sole proprietorship, the debtor is solely responsible for business debt and so could opt for a chapter 13 filing. For those who can claim business debts but are not the sole proprietor, debts they are personally liable for can be included in a chapter 13 filing. For most other business bankruptcy cases, chapter 11 is the more viable option, with some sole proprietorships also being able to wind down operations using chapter 7.

A Chapter 13 Bankruptcy can help you if:
You have unsecured debts less than $394,725 and secured debts less than $1,184,200
Your income is too high and you fail the means test for filing chapter 7 bankruptcy
You are behind in your car or house payments but want to avoid repossession or foreclosure
You filed a chapter 7 bankruptcy less than eight years ago
You owe money on taxes and want to negotiate a repayment plan

How Does Chapter 13 Bankruptcy Work?

COUNSELING. Credit counseling courses can help to determine if the situation calls for bankruptcy, or if another financial strategy could work. We can help debtors to find an approved credit counseling agency and work out any fees. This course must be completed prior to filing a petition with the court.

FILING A PETITION. A petition must be filed in bankruptcy court to begin proceedings and a detailed record of expenses and income will need to be provided. A thorough list of creditors should be included so the courts can notify them of the bankruptcy case. If the debtor is married, their spouse’s financial information will also be required so that the court, trustee, and creditors can evaluate the household's financial situation.

AUTOMATIC STAY. As is the case with other bankruptcy chapters, an automatic stay goes into effect once the petition is filed. Creditors are then prohibited from pursuing the debtor for payments, evictions or foreclosures, a collections trial, bank levies, property seizures, and other collection processes. An automatic stay provides the debtor with breathing room and allows time for a repayment plan to be drafted. Chapter 13 bankruptcy includes a special provision that also protects co-debtors from creditors who are seeking to collect.

341 MEETING. The court will appoint a trustee and they will conduct a meeting with the debtor and creditors where questions will be asked about the debtor’s financial situation and proposed repayment plan. This meeting is a required part of any chapter 13 bankruptcy filing.

CONFIRMATION HEARING. The debtor proposes a 3 or 5 year repayment plan either with the petition or within 14 days after the petition is filed. The bankruptcy judge decides whether the plan is reasonable.

POST-CONFIRMATION. If the repayment plan is approved, the debtor begins to submit regular payments to the trustee who, in turn, pays creditors.

SECURED DEBT. The debtor must satisfy all past due amounts owed to secured creditors. We can work with debtors in crafting their repayment plan to ensure that they are able to keep collateral for defaulted secured loans. Unsecured claims do not need to be repaid in full as long as certain criteria are met: 1) the debtor agrees to pay all projected disposable income over their repayment period; 2) unsecured creditors receive at least as much as they would have under a chapter 7 liquidation.

FINANCIAL MANAGEMENT COURSE. Also called the “predischarge debtor education course,” this requirement holds for all individuals filing chapter 13 bankruptcy, excepting a few rare circumstances.

DEBT DISCHARGE. Debtors must file a certificate of completion before the last plan payment. At this point, the presiding judge can discharge any remaining qualified debts and a debtor will be left without any responsibility or legal obligation to pay them.

Consult with an Akron Canton Bankruptcy Attorney

If you find yourself surrounded by mounting debts, but don’t qualify for a chapter 7 bankruptcy case, then chapter 13 bankruptcy might be your quickest and most practical option. Drafting a repayment plan that satisfies creditors and is fair to your financial situation is tricky. That’s why you’ll want to hire a reputable bankruptcy attorney so that your case is processed smoothly from start to finish. At Bates and Hausen, LLC we are nationally known and experienced bankruptcy attorneys John R. Bates and James F. Hausen. Together we offer you over 50 years of legal expertise.

We understand that this is a difficult time – we offer competitive fees and are able to work within your parameters. Contact Northeast Ohio Bankruptcy Attorneys today to set up a free consultation to determine if a chapter 13 bankruptcy is the best course of action for you. We proudly serve the Akron, Canton, Wooster, and Dover/New Philadelphia communities and are here to help.

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