Florida Chapter 13 Bankruptcy Lawyer

Chapter 13 is also known as the wage earner’s bankruptcy

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As with Chapter 7 bankruptcies, Chapter 13 bankruptcies are a reasonable and responsible way to handle unforeseen financial difficulties, such as divorce, loss of a job, medical expenses, and unforeseeable natural disasters.

However, as opposed to Chapter 7 bankruptcies, Chapter 13 bankruptcies are a better fit for people who earn a substantial income or who want to protect valuable property. In exchange for relief of their debt, Chapter 13 filers pay off their debt to their creditors over the course of a three- to five-year repayment plan. 

Chapter 13 allows people with a steady income to repay some creditors less than the amount owed while keeping all assets, including a house and car.

Is Chapter 13 Bankruptcy Right for Me?

Unlike Chapter 7 bankruptcies, Chapter 13 bankruptcies are for individuals only and are not available for business entities. For such qualifying individuals, Chapter 13 bankruptcy has several benefits, including:

  • For debtors who do not pass the Chapter 7 means test, Chapter 13 bankruptcies are their best bet.
  • Debtors are allowed to keep non-exempt property that would otherwise be sold in a Chapter 7 bankruptcy.
  • Debtors can prevent legal collection tactics, such as the particularly painful garnishment of wages while paying off their non-dischargeable debt in the Chapter 13 repayment plan.
  • Homeowners and car owners who are behind on their payments can pay the overdue amounts over a three-to-five-year period and keep the house and/or car.

What is Chapter 13 Bankruptcy?

Chapter 13 Bankruptcy is called a reorganization or wage earners bankruptcy. In this chapter, you can keep your non-exempt property, unlike in Chapter 7, where you have to surrender it to the trustee. This chapter is available to people with a regular monthly income who agree to pay part of their income to the creditors over three to five years. 

In a Chapter 13 case, you file a “plan” showing how you will pay off some of your past-due and current debts over three to five years. The most important thing about a Chapter 13 case is that it will allow you to keep valuable property, especially your home and car. This valuable property might otherwise be lost if you can make the payments that the bankruptcy law requires to your creditors. In most cases, these payments will be at least as much as your regular monthly payments on your mortgage or car loan, with some extra payment added to ensure you get caught up on the amount you have fallen behind.

How do I know if I am eligible?

As discussed, the primary benefit of a Chapter 13 filing benefit of this chapter is that you repay a large portion of your debt over the course of a three- to five-year repayment plan. For a court to approve this plan, you must show, by completing the official bankruptcy paperwork, that you:

  • Are an individual rather than a business
  • Are within the debt amount limitations
  • Are up to date on your tax filings
  • Are employed and making enough money to cover the plan’s required monthly payment

Impact of Means Test on Chapter 13

The Means Test will determine if you are eligible for Chapter 7 or Chapter 13. If your income is above the median family income in your state, you may have to file a Chapter 13.

Higher-income consumers must fill out “means test” forms requiring detailed information about their income and expenses. If the documents show that you have a certain amount left over that could be paid to unsecured creditors, the bankruptcy court may decide that they can not file a Chapter 7 case. This is a specific analysis that one of our bankruptcy attorneys will need to perform for you.

You should consider filing a Chapter 13 plan if you:

  • Own your home and are in danger of losing it because of money problems
  • Are behind on debt payments but can catch up if given some time
  • Have valuable property which is not exempt, but you can afford to pay creditors from your income over time. You will need to have enough income during your Chapter 13 case to pay for your necessities and to keep up with the required payments as they come due.
  • Chapter 13 might also be an option if you are behind or in danger of falling behind on your mortgage payments as a Chapter 13 Debtor can elect to pursue a Court-Ordered Mediation with their mortgage lender. The benefit of participating in mediation through the bankruptcy court is that your lender is “Ordered” by the Bankruptcy Judge to mediate in “good faith” to try to modify your current mortgage.

About the Process

 

How long does it take?

The simple answer is three to five years. This is consistent with the length of your approved three- to five-year repayment plan, which must be completed before your debts are officially considered paid off.

 

Chapter 13 Filing Roadmap

Pre-Filing

  • Pay attorney’s fees in full, gather all required documents, schedule an appointment for a Questionnaire Review, and write down questions for the attorney. 
  • Provide any additional documents requested at the Questionnaire Review, take the Credit Counseling Course at Debthelper.com. If you have an operational business, please provide our office with the business’s bank statements. Additionally, please annotate all non-business-related (personal) deposits and withdrawals. Our office will give you a call to schedule an appointment to sign your bankruptcy petition once it is ready. 
  • On the date of filing your bankruptcy petition, our office will give you a call to get the current balances for all of your bank accounts (personal and business). You will be provided with the case number once your bankruptcy petition is filed.

Post-Filing

Trustee Assigned

  • About a week after your petition is filed, a Bankruptcy Trustee will be assigned, and the court will automatically schedule a date for the 341 Meeting of Creditors. 
  • The meeting will usually take place about 30-45 days after filing. 
  • You will receive a letter from our firm reminding you of the date, time, and place of the meeting. 
  • You must attend the meeting in person and bring your original Social Security card and Driver’s License to show the Trustee. 
  • At the meeting, the Trustee will ask you questions about your assets, liabilities, income, expenses, and other questions pertaining to your specific case. 
  • Please be familiar with your monthly expenses, such as food, home maintenance, and medical expenses.

Payment begin

Your payments to the Trustee will start in about 30 days from the date of filing your petition. 
You will receive a letter from the Trustee indicating the amount, date of payment, and the address where to send the payments. 

Confirmation of Plan Hearing

  • The next step in a Chapter 13 filing is a Confirmation of Your Plan Hearing. 
  • You do not have to attend this hearing. 
  • The attorney handling your case will attend the hearing on your behalf. 
  • Prior to the confirmation hearing, the Trustee will file a Recommendation concerning your case. Usually, the Recommendation is Unfavorable and restates the issues that still have to be dealt with in your case. For example, if your income is understated or if the trustee feels that your expenses are too high or luxurious, you may have to show proof of particular expenses for the Trustee to allow those expenses, or if any amendments need to be filed in your case.
  • Your creditors have approximately five months from the date of filing to file claims in your case. 
  • The first Confirmation Hearing is usually continued for a variety of reasons. 
  • If your case is for 100% repayment, you need to wait until the last date for your creditors to file a claim (to determine how many claims were filed)

Order of Confirmation

  • Once your case is confirmed, your payments to the Trustee are determined. 
  • In about a month, you will receive an Order of Confirmation spelling. This will detail your plan’s contents, duration, and who is entitled to receive the Trustee’s distribution of funds. 
  • You can set your payments to withdraw from your bank account automatically. 
  • Please note that you might be required to surrender your tax refunds to the Trustee for the duration of your Chapter 13 Plan.

How will Chapter 13 Impact My Credit?

As with a Chapter 7 bankruptcy, your credit scores will be negatively impacted initially, but Chapter 13 bankruptcies are also seen as a good faith starting point for rebuilding your credit. In fact, most creditors favor Chapter 13 bankruptcies over Chapter 7 bankruptcies because the debtor’s payment obligations are reorganized instead of discharged.

Additionally, creditors understand that Chapter 13 debtors are generally prohibited from obtaining additional debt, meaning that a debtor’s income will be applied to their payment plan obligations rather than being spent on new debt.

Contact A Florida Chapter 13 Lawyer Today

Although bankruptcy is often stigmatized by the ignorant as an attempt by debtors to avoid paying their debts, bankruptcy actually provides debtors with an opportunity for a fresh start and an end to their financial struggles. Although the bankruptcy process can be daunting, an experienced Fort Myers and Cape Coral Chapter 13 bankruptcy lawyer will help you be sure that you are taking full advantage of your rights and protecting your financial interests.

At Martin Law Firm, we will treat you with compassion, understanding, and personal attention throughout this difficult process. Our lead attorneys are a husband and wife team who run the firm as a family business. We know how important your financial position and your personal assets are for your peace of mind. Take the first step toward financial freedom, and contact us today to learn more about whether and how bankruptcy may be right for you.