Chapter 13 Bankruptcy

CHAPTER 13 BANKRUPTCY LAWYERS IN DECATUR AND HUNTSVILLE

Chapter 13 Bankruptcy Attorneys Near Me

We can help you in Huntsville, Decatur, Cullman, Scottsboro, Athens, AL, and the surrounding areas.

Chapter 13 bankruptcy attorneys at Ferguson & Ferguson have successfully handled thousands of chapter 13 bankruptcy cases throughout Alabama. Chapter 13 is called the wage earner’s plan and allows people with a regular income to develop a plan for the repayment of debt. Self-employed people can file for Chapter 13. The goal of most personal bankruptcy is to discharge your existing debts by repaying all or a portion of your debts and allow you a fresh start on your finances. In other words, once your discharge is granted, you no longer need to repay the debts that were incurred before you filed your bankruptcy. Assuming you need to file for bankruptcy, the only way to determine which Chapter to file under is to first compare your options under the other available Chapters and be sure you have consulted with an experienced bankruptcy attorney to properly analyze your options. Our offices are in Huntsville and Decatur, Alabama, but we handle Chapter 13 cases throughout Alabama. We are not just Huntsville, Alabama bankruptcy attorneys – we serve the entire state of Alabama and look forward to helping you get a fresh start. Call now to get your free consultation with one of our Chapter 13 attorneys. Call 256-534-3435 or 256-350-7200.

How Can Chapter 13 Bankruptcy Help Me?

When someone files for bankruptcy under Chapter 13 of the Bankruptcy Code, they aim to have the opportunity to repay some or all the debts in their name, in better terms, i.e., with lower or no interest. Unlike Chapter 7, which involves the liquidation of assets, this process involves restructuring debts, which allows the debtor to use whatever income they may have in the future to pay off the creditors. Filing Chapter 13 Bankruptcy is thus applicable for a debtor who has a regular income but desires to repay their creditors, but is in financial difficulty. The maximum amount of time to pay back creditors is 5 years. Among other things, it offers great opportunities to pay off past-due mortgage arrearages or car payments over 36-60 months, giving you time to catch up and keep your property. It is often referred to as a “mini-Chapter 11” by many bankruptcy attorneys and lawyers because you usually repay something to your creditors, and you retain your property and make payments under a Plan. Chapter 13 can help you protect and keep all your assets, stop foreclosure sales and catch up on past due mortgage payments over time, remove liens, such as second mortgages, on your property, discharge unsecured debts (such as credit cards, medical bills, certain taxes, and more) by doing an affordable repayment plan from 0%-100% and repay debts with zero percent interest.

Overview of Chapter 13 in Alabama

Chapter 13 bankruptcy is a debt repayment plan for individuals, but the repayment can be anywhere from 0% to 100% of your unsecured debt. Even a 100% repayment plan in a Chapter 13 case can often be a much better deal than trying to repay your creditors outside of bankruptcy because you pay zero percent (0%) interest in a Chapter 13 case. A bankruptcy attorney can determine what your payment is likely to be. There are some court and trustee’s fees, but let an attorney evaluate your budget and see what you can accomplish in a Chapter 13, and compare that to your other options. One purpose of a Chapter 13, as opposed to a Chapter 7, is to enable a debtor to retain certain assets (for example, your home) that might otherwise be liquidated by a Chapter 7 Trustee. It also provides an alternative to Chapter 7 when you have too much “disposable income” (your net monthly income exceeds your net monthly expenses by too much) and usually yields much lower monthly payments than you were previously paying. After 36-60 months, you are done. Your debts are gone.

Who may file for Chapter 13 bankruptcy in Alabama?

Only an individual with a regular income who owes, on the date you file the petition, less than the maximum allowed in unsecured debt and less than the maximum in secured debts. The debts used to calculate these limits must also be non-contingent and liquidated, meaning that they must be for a certain, fixed amount (or easily determinable amount) and not subject to any conditions or bona fide disputes. If they are legitimately disputed or not liquidated, then those amounts may not be factored into the debt limit calculations. You may be required to do a Chapter 13 if your annual income exceeds the median income for the region where you are filing and if the “means test” shows you have more than $100-$167 per month to pay to your creditors. Also, at that time, your allowable monthly expenses will primarily be whatever is allowed under local IRS guidelines.

What are the benefits of Chapter 13?

A Chapter 13 filing may allow you to immediately stop home foreclosure, an auto repossession, or wage garnishment and help to consolidate your debt into one monthly payment that you can afford. The filing of a Chapter 13 bankruptcy imposes an automatic stay from the Bankruptcy Court that stops any home foreclosure or automobile repossession action. Chapter 13 protects individuals from the collection efforts of creditors, permits individuals to keep their real estate and personal property, and provides individuals the opportunity to repay their debts through reduced payments. You may be able to get rid of junior liens on your real property (known as a “lien strip”). If the fair market value of your property is less than the total amount owed to the 1st mortgage, then you can eliminate the security interest to any junior lienholders and treat them as general unsecured creditors in your plan (thereby being able to possibly pay them less than 100%). This can be a tremendous benefit that your attorney can assist with accomplishing. Certain tax repayments can be made easier by the elimination of interest payments.

How does Chapter 13 work, and how long does it last?

You must have “regular income”. This means you must have some source of income that is regular, or at least can be averaged regularly on an annual basis, for example. You are usually required to pay all of your disposable income to the Trustee (through your Plan) for 36-60 months. Your disposable income is defined as income received by you in the 6 calendar months before filing (see current monthly income) minus expenses that are reasonably necessary for the maintenance and support of you or your dependents. The keyword in the definition is “reasonably”. For example, if you are used to spending $1,000 a month on a car, you would not be allowed that much of an expense for that, since that is not considered “reasonable”. Many of the figures used in this calculation are fixed amounts generated by the Internal Revenue Service based on geographic location. They aren’t necessarily your actual expenses. This is one of the big changes under the 2005 bankruptcy laws. Plan payments last for 36 to 60 months, depending on certain numerical eligibility requirements. Therefore, if your payment analysis shows, for example, that your disposable income is $200.00 per month (above and beyond your normal living expenses), you would pay that each month to the Chapter 13 bankruptcy Trustee, who would disperse it pro rata among your creditors. At the end of 36 (or 60) months, you are discharged from all dischargeable unsecured debts, regardless of how much your creditors have received. In most bankruptcy courts, including those in Alabama, $150-$200 is likely the minimum payment one can make in a Chapter 13 case. Any less than that and you’re essentially filing a Chapter 7 case and trying to get the benefits of a Chapter 13, so that usually isn’t going to be acceptable, although there are always exceptions. In addition to your plan payments, you must stay current with any ongoing obligations you have to secured creditors, such as your mortgage. Chapter 13 (or any chapter of bankruptcy for that matter) only affects debts that you owe on or before you filed the bankruptcy. Therefore, on your mortgages and other secured debts, your monthly Plan payment goes to pay any arrearages (past due amounts) that existed on the date you file and you can repay that arrearage over the life of the Plan; but, you must stay current from the filing date forward with any mortgage payments, etc. Secured debts (your mortgages) must be repaid in full, but Chapter 13 enables you to cure the defaults (reinstate the loans) over 36 months (or up to 60 months with creditor consent and court approval). You also can eliminate junior liens from your real property under certain circumstances and restructure mortgage and certain other payments. Another thing to bear in mind is that approval of any Chapter 13 Plan of repayment requires a determination by the court that the case is filed and the plan proposed in good faith.

How much will I have to pay each month?

The size of your monthly plan payments is determined in part by the amount of your disposable income. If your current budget shows you can afford to pay more than that amount, the Trustee in your case will seek to have your payment amount increased (if you are paying less than 100% of your unsecured debts through the plan). Assessing the amount you will pay in a Chapter 13 is very tricky and is one of the reasons you need an experienced lawyer and attorney. Another “catch” is that you must pay out at least as much in the Chapter 13 Plan as your creditors would have gotten if you filed a Chapter 7 case. Therefore, if you have a lot of non-exempt assets, you would need to account for this in your plan. Depending on what your disposable income is, you may have to sell some of your non-exempt assets to fund your Chapter 13 plan. If this is the case, you might just as well file a Chapter 7, but not necessarily. If you miss any payments at all that are due under your Plan, your case will be dismissed by the Court. Lastly, you cannot borrow money (incur new debt) exceeding approximately $250.00 during the pendency of your case (usually 3 years), without first obtaining court approval. This can be somewhat of a problem if, for example, your car lease expires and you need to get a new car during this period.

How Can Our Chapter 13 Attorneys Help?

Your Chapter 13 Bankruptcy case begins by filing a petition with the bankruptcy court in Decatur, Alabama. You will be asked to submit to the court the following: a current listing of your assets and liabilities, a list of your current income and expenditures, a schedule of certain loan contracts and unexpired leases and a complete statement of your financial affairs. Your knowledgeable attorney from Ferguson & Ferguson will explain this all to you and assist you in gathering all of the necessary paperwork. You may be eligible to file Chapter 13 if you have a current regular income. Chapter 13 will allow you to keep your property and pay off your debts over time, usually three to five years, pursuant to a court-approved repayment plan as well as approved financial counseling. Most importantly, perhaps, Chapter 13 offers you the opportunity to save your home from foreclosure. By filing Chapter 13 bankruptcy, you can stop foreclosure; however, you must be able to make all mortgage payments during this time. Another advantage of filing for Chapter 13 bankruptcy protection is that it will allow you to repay your other debts over the life of your Chapter 13 plan, often resulting in lower payments. Chapter 13 also has a special provision that may protect any co-signers you may have. In addition you will have no direct contact with creditors while under Chapter 13 protection. If you are having problems paying your bills, call us now for a free bankruptcy consultation. We understand bankruptcy laws, and we are here to help. Call now. Call 256-534-3434 or 256-350-7200.

Chapter 13 Bankruptcy Frequently Asked Questions

The following answers provide general information about Chapter 13 bankruptcy. Bankruptcy cases are fact-specific, and debt limits, official forms, median-income figures, trustee procedures, and other requirements may change. Speak with a bankruptcy attorney about the law and procedures applicable to your case.

What is Chapter 13 bankruptcy?

Chapter 13 bankruptcy is a court-supervised process for individuals with regular income who propose a repayment plan for all or part of their debts. The plan generally lasts three to five years.

Why is Chapter 13 called a wage earner’s plan?

Chapter 13 is often called a wage earner’s plan because the debtor uses regular income to make payments under a court-approved repayment plan. Income can come from employment, self-employment, retirement, benefits, or another sufficiently regular source.

Who may qualify for Chapter 13 bankruptcy?

Chapter 13 is generally available to an individual with regular income who meets the applicable eligibility requirements. Debt limits and other qualifications can change, so eligibility should be evaluated using the law in effect on the filing date.

Can a self-employed person file Chapter 13?

Yes. A self-employed individual may file Chapter 13 when the person has sufficiently regular income and can propose a feasible repayment plan.

How long does a Chapter 13 repayment plan last?

A Chapter 13 plan generally lasts three to five years. The required plan period depends in part on current monthly income, applicable median-income standards, and whether unsecured claims are paid in full sooner.

How is a Chapter 13 payment calculated?

A Chapter 13 payment depends on income, reasonable and necessary expenses, secured-debt arrears, priority debts, nonexempt property, trustee fees, attorney fees, and the treatment of unsecured creditors. The proposed plan must satisfy the Bankruptcy Code’s confirmation requirements.

When do Chapter 13 plan payments begin?

A debtor generally must begin making plan payments to the Chapter 13 trustee within 30 days after filing the case, even if the court has not yet confirmed the plan.

What does a Chapter 13 trustee do?

The Chapter 13 trustee reviews the proposed plan and financial disclosures, conducts the meeting of creditors, collects plan payments, distributes funds to creditors, and monitors compliance with the confirmed plan.

What is Chapter 13 plan confirmation?

Confirmation is the bankruptcy court’s approval of the repayment plan. The court considers whether the plan complies with bankruptcy law, was proposed in good faith, is feasible, and provides creditors the treatment required by law.

Can Chapter 13 stop a foreclosure?

Filing Chapter 13 generally triggers the automatic stay, which may temporarily stop a scheduled foreclosure. Chapter 13 can allow a qualified debtor to cure prefiling mortgage arrears over time while remaining current on required post-filing payments.

Can Chapter 13 help me catch up on mortgage payments?

Yes. A Chapter 13 plan may allow a debtor to repay qualifying prefiling mortgage arrears over the life of the plan. The debtor ordinarily must also remain current on mortgage payments that become due after filing.

Can Chapter 13 stop a vehicle repossession?

The automatic stay may stop a repossession when the vehicle has not already been repossessed and no exception applies. The plan must provide legally acceptable treatment for the vehicle lender, and ongoing payments may be required.

Can Chapter 13 help me keep my car?

Chapter 13 may allow a debtor to retain a financed vehicle by providing for the secured claim through the plan or by maintaining required payments. The precise treatment depends on the loan, vehicle value, purchase date, and local practice.

Can Chapter 13 stop wage garnishment?

The automatic stay generally stops most wage garnishments for debts covered by the bankruptcy case. Garnishments involving domestic support and certain other obligations may be treated differently.

Can Chapter 13 stop creditor lawsuits and collection calls?

The automatic stay generally pauses most collection lawsuits, calls, letters, and other efforts to collect prefiling debts. Creditors may seek relief from the stay, and statutory exceptions may apply.

Can Chapter 13 protect a co-signer?

Chapter 13 includes a co-debtor stay that may protect an individual who is jointly liable with the debtor on certain consumer debts. A creditor may ask the court to modify or lift that protection in some circumstances.

Can I keep my property in Chapter 13?

Chapter 13 commonly allows debtors to keep property while making payments under a confirmed plan. The value of nonexempt property can affect the minimum amount that must be paid to unsecured creditors.

What is the best-interests-of-creditors test?

A Chapter 13 plan generally must provide unsecured creditors at least as much as they would receive in a hypothetical Chapter 7 liquidation. This requirement can increase the plan payment when the debtor owns nonexempt property.

What is disposable income in Chapter 13?

Disposable income generally means income remaining after subtracting amounts reasonably necessary for the maintenance or support of the debtor and dependents, together with other deductions allowed by bankruptcy law.

Must all disposable income be paid into the plan?

When an unsecured creditor or trustee objects, a debtor may be required to commit projected disposable income to the plan for the applicable commitment period unless unsecured claims are paid in full.

Are unsecured debts paid in full in Chapter 13?

Not always. Depending on income, assets, expenses, priority obligations, and other requirements, a confirmed plan may pay unsecured creditors anywhere from a small percentage to the full amount of allowed claims.

What happens to credit-card and medical debt in Chapter 13?

Credit-card balances and medical bills are generally treated as unsecured claims. They receive the distribution required by the confirmed plan, and qualifying unpaid balances may be discharged after successful plan completion.

How are taxes treated in Chapter 13?

Certain priority tax debts generally must be paid in full through the plan, while other tax claims may receive different treatment. Valid tax liens may survive unless properly addressed under bankruptcy law.

How are child support and alimony treated in Chapter 13?

Domestic support obligations receive special treatment. A debtor generally must remain current on post-filing support and provide for required prefiling arrears in the plan to obtain confirmation and discharge.

Can Chapter 13 remove a second mortgage?

In limited circumstances, a wholly unsecured junior mortgage may be treated as an unsecured claim. Whether lien stripping is available depends on property value, senior liens, controlling law, and the facts of the case.

Can Chapter 13 reduce the balance owed on a vehicle?

Chapter 13 may permit modification of certain secured vehicle claims, but special rules apply, including restrictions based on when the vehicle was purchased. An attorney must evaluate the loan and filing date.

Can Chapter 13 lower interest on secured debts?

A confirmed plan may alter the interest rate paid on certain secured claims when bankruptcy law permits. Home mortgages secured only by the debtor’s principal residence are subject to significant anti-modification restrictions.

What happens at the Chapter 13 meeting of creditors?

The debtor answers questions under oath from the trustee about income, expenses, assets, debts, and the proposed plan. Creditors may attend and ask appropriate questions, although the bankruptcy judge does not preside over the meeting.

Do I need credit counseling before filing Chapter 13?

An individual generally must complete approved credit counseling within the legally required period before filing, unless a statutory exception applies. A separate financial-management course is usually required before discharge.

What documents are needed for a Chapter 13 case?

Commonly needed documents include income records, tax returns, bank statements, mortgage and vehicle statements, creditor information, insurance records, property valuations, retirement statements, support orders, and a detailed household budget.

Can I incur new debt during Chapter 13?

Incurring significant new debt during Chapter 13 commonly requires trustee or court approval. Local procedures differ, so a debtor should consult counsel before financing a vehicle, taking a loan, or making another major credit purchase.

What happens if I miss a Chapter 13 payment?

Missed payments can lead to a trustee motion to dismiss the case or other relief. Depending on the circumstances, counsel may seek a temporary cure, plan modification, hardship relief, or another appropriate remedy.

Can a Chapter 13 plan be modified after confirmation?

A confirmed plan may sometimes be modified because of changed income, expenses, claims, or other circumstances. Modification must comply with the Bankruptcy Code and receive court approval.

What happens if my Chapter 13 case is dismissed?

Dismissal generally ends bankruptcy protection without discharging unpaid debts. Creditors may resume lawful collection activity, subject to any separate legal restrictions.

Can a Chapter 13 case be converted to Chapter 7?

A debtor may be able to convert a Chapter 13 case to Chapter 7, but eligibility, property consequences, prior filings, good faith, and discharge issues should be reviewed before conversion.

What is a Chapter 13 hardship discharge?

A hardship discharge may be available in limited circumstances when plan completion becomes impossible for reasons beyond the debtor’s control, creditors received at least the required liquidation value, and plan modification is not practical.

When do I receive a Chapter 13 discharge?

A Chapter 13 discharge is generally entered after the debtor completes all required plan payments, satisfies applicable domestic-support certifications, completes the required financial-management course, and meets other statutory requirements.

Which debts are not discharged in Chapter 13?

Certain debts may survive Chapter 13, including domestic support obligations, many student loans, specified taxes, criminal restitution, certain long-term secured obligations, and other debts excluded by the Bankruptcy Code.

How is Chapter 13 different from Chapter 7?

Chapter 13 uses a repayment plan and commonly allows debtors to retain property and cure secured-debt defaults. Chapter 7 generally has no repayment plan and may involve liquidation of nonexempt property by a trustee.

Does Ferguson & Ferguson offer free Chapter 13 consultations?

Yes. Ferguson & Ferguson offers free bankruptcy consultations. The Huntsville office can be reached at 256-534-3435, and the Decatur office can be reached at 256-350-7200.

Where are Ferguson & Ferguson’s Chapter 13 offices located?

The Huntsville office is located at 303 Williams Avenue SW, Suite 321, Huntsville, Alabama 35801. The Decatur office is located at 211 Oak Street NE, Decatur, Alabama 35601.

Why Hire Chapter 13 Attorneys at Ferguson & Ferguson?

Because Ferguson & Ferguson has experience and resources unrivaled by any other Huntsville bankruptcy law firm, we are able to give your case the attention you and your finances deserve. We understand that your time is important, so we will never put you on hold or transfer your call from person to person. You will always be able to reach your Huntsville bankruptcy lawyer, and you will be kept fully informed on each stage your Huntsville bankruptcy case. If you are considering bankruptcy, the last thing you want to worry about is skyrocketing attorney fees. Other Huntsville bankruptcy law firms may quote you a low price to get you in the door, then add on more and more fees once you are committed. Here at Ferguson & Ferguson, we understand that you are going through difficult financial times, so we have taken the mystery out of pricing. We are upfront about costs and fees from the very beginning, and we offer our customers reasonable, flexible payment plans. If you are burdened by debt but unsure if filing for bankruptcy is the solution, why not come by our office for a free, no-obligation consultation? Our bankruptcy lawyers will answer your questions and offer you honest, straightforward legal advice. We are not here to sell you on our services, but to help you make the best decision for your situation. Call 256-534-3435 to get started. We are here to help. Huntsville Office Location: 303 Williams Avenue SW Suite 321 Huntsville, AL 35801 Decatur Office Location: 211 Oak Street NE Decatur, AL 35601