BANKRUPTCY DIVISION LAW

CHAPTER 7

For individuals who find themselves in debt far over their heads with little or no chance of repayment, a Chapter 7 bankruptcy is a welcome relief. Designed to give honest individuals a fresh start, millions of people have taken advantage of this amazing component of our legal system. A Chapter 7 bankruptcy can allow you to:Wipe out most (if not all ) of your debts.Put an end to creditor calls, lawsuits, wage garnishments, repossessions and more. Get court protection from creditors. As soon as the bankruptcy is filed, an "automatic stay" goes into effect. Harassment from collection agencies and other creditors will stop! Gain back peace of mind and make a new start! For a low, flat fee I can assist you by analyzing your financial situation to insure that you cancel out the largest possible amount of your debts and keep all the property you are legally entitled to. In addition, I will prepare and file all the forms that are required by the Bankruptcy Court and represent you at the meeting of creditors.


CHAPTER 13

Differences between Chapter 7 and Chapter 13 Under Chapter 7, the Debtor loses all or most of his or her nonexempt property and receives a Chapter 7 discharge, which releases the Debtor from liability for most debts. Under Chapter 13, the Debtor usually retains his or her nonexempt property, must pay off as much of his or her debts as the Court deems feasible, and receives a Chapter 13 discharge. When To Enter Chapter 13 Chapter 13 is usually preferable for a Debtor who:

  1. Has valuable nonexempt property.
  2. Is not eligible for a discharge under Chapter 7 (i.e. filed prior Chapter 7 within 6 yrs, or committed Bankruptcy crimes).
  3. Has one or more substantial debts that are not dischargeable under Chapter 7 but are dischargeable under Chapter 13 (i.e., some tax claims).

What is a Chapter 13 Trustee?


A Chapter 13 Trustee is an officer of the Cour appointed to collect payments from the Debtor, make payments to Creditors in the manner set forth in the Debtor's Plan, and administer the Debtor's Chapter 13 case until it is closed. The Chapter 13 Trustee is also required to perform certain other duties, and the Debtor is required to cooperate with the Chapter 13 Trustee.


The Types of Plans Available

While certain debts, such as debts for taxes and fully secured debts, must be paid in full under a Chapter 13 Plan, only an amount that the Debtor can reasonably afford must be paid on most debts. The unpaid balance of most debts that are not paid in full under a Chapter 13 Plan is discharged upon completion of the Plan. Under a Chapter 13 Plan, all Creditors must receive at least as much as they would have in a case of liquidation of assets under Chapter 7 of the Bankruptcy Code.

How much of a Debtor's income must be paid to the Chapter 13 Trustee under a Chapter 13 Plan?

Usually all of the surplus income of the Debtor and the Debtor's spouse for a three-year period must be paid to the Chapter 13 Trustee. Disposable income is income received by the Debtor and his or her spouse that is not reasonably necessary for the support of the Debtor and the Debtor's dependents.


Treatment of Secured Creditors

Arrears owed to a secured creditor can be cured within the Plan. It is important to understand that a creditor has a secured claim only to the extent of the value of its security, which cannot exceed the value of the property securing the claim. Home mortgages have special rules under recent amendments.


Eligibility Rules

Any natural person may file under Chapter 13 if the person:

  1. Has regular income.
  2. Has unsecured debts of less than $250,000.
  3. Has secured debts of less than $750,000.

When does a Debtor have to appear in Court in a Chapter 13 case?

Most Debtors have to appear in Court at least twice: once for a hearing called the Meeting of Creditors, and once for a hearing on the Confirmation of the Debtor's Chapter 13 Plan. The Meeting of Creditors is usually held about a month after the case is filed.


What fees are charged in a Chapter 13 case?

There is currently a court-required filing fee of $160 charged when the case is filed. In addition, the Chapter 13 Trustee assesses a fee of 10 percent on all payments made under the Plan. These court filing fees are in addition to the fee charged by the Debtor's attorney, and are paid directly to the Court.


How does filing under Chapter 13 affect collection proceedings and foreclosures previously filed against the Debtor?

The filing of a Chapter 13 case immediately and automatically stays (stops) all lawsuits, attachments, garnishments, foreclosures, and other actions by Creditors against the Debtor or the Debtor's property. Within a few days after the case
is filed, the Court will mail a notice to all Creditors advising them of the automatic stay. Certain Creditors may be notified sooner, if necessary. Most Creditors are prohibited from proceeding against the Debtor during the entire course of the Chapter 13 case. If the Debtor is later granted a Chapter 13 discharge, the Creditors will then be forever prohibited from collecting the discharged debts from the Debtor after the case is closed. The role of the Debtor's attorney in a Chapter 13 case.


The Debtor's attorney will typically perform some or all of the following functions in Chapter 13 cases:

  1. Examining the Debtor's financial situation and determining whether Chapter 13 is a feasible alternative for the Debtor, and if so, whether a single or joint case should be filed;
  2. Assisting the Debtor in the preparation of a monthly budget;
  3. Examining the liens or security interests of secured Debtors to ascertain their validity or avoidability, and taking the legal steps necessary to protect the Debtor's interest in such matters;
  4. Developing and implementing methods of dealing with secured Creditors;
  5. Assisting the Debtor in developing a Chapter 13 Plan that meets the needs of the Debtor and is acceptable to the Court;
  6. Preparing the necessary pleadings and Chapter 13 forms;
  7. Filing the Chapter 13 forms and pleadings with the Court and forwarding the filing fee (currently $160, to be paid by the Debtor);
  8. Attending the Meeting of Creditors, the Confirmation Hearing, and any other Court hearings required in the case;
  9. Assisting the Debtor in obtaining Court approval of a Chapter 13 Plan;
  10. Checking the claims filed in the case, filing objections to improper claims, and attending Court hearings thereon;
  11. Assisting the Debtor in overcoming any legal obstacles that may arise during the course of the case;
  12. Assisting the Debtor in obtaining a discharge upon the completion or termination of the Plan.