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Memphis Chapter 13 Lawyer
An individual debtor may need bankruptcy protection even if the debtor has a steady income and significant assets. Perhaps the debtor took on too many liabilities and debts even with his or her income. Or perhaps the debtor faced an unexpected illness or temporary layoff but has now returned to full-time work. If his or her assets are too great, a Chapter 7 bankruptcy will not be available to him or her. In such a situation, the debtor may be able to file a Chapter 13 bankruptcy.
A Chapter 13 bankruptcy affords debtors many of the same protections as a Chapter 7 bankruptcy while allowing the debtor to pay off his or her obligations over a period of time. There are some drawbacks to a Chapter 13 bankruptcy as well. Speak with Douglass & Runger, Attorneys at Law, to determine if a Chapter 13 bankruptcy is right for you.
Basics of a Chapter 13 Bankruptcy
Like a Chapter 7 bankruptcy, a Chapter 13 bankruptcy begins when a debtor files a petition in his or her local bankruptcy court. The petition will set forth the assets and liabilities of the debtor. Unlike a Chapter 7 bankruptcy, in a Chapter 13 bankruptcy the debtor must also include a plan to pay off his or her obligations and debts over the bankruptcy period (typically three to five years) using the debtor’s “disposable income,” an amount that is calculated using a standardized formula.
In a Chapter 13 plan, so long as the debtor makes the payments required under the plan, he or she can keep exempt property as well as some nonexempt property (i.e., there may not be any need to liquidate the debtor’s assets as in a Chapter 7 bankruptcy). A Chapter 13 plan can also be used to “catch up” on mortgage payments or car payments (or other similar obligations) that are in arrears. At the conclusion of the repayment period (again, typically three to five years), any eligible unsecured claims that have not been paid are discharged and the debtor is no longer legally obligated to pay such claims. Claims that are typically not discharged in a Chapter 13 bankruptcy include child support amounts, taxes owed to a local, state, or the federal government, certain judicial judgments, and student loans.
Drawbacks of Chapter 13 Bankruptcy Plans
A Chapter 13 bankruptcy is not for everyone. Those who are not successful in making a Chapter 13 plan work may find that their case is either dismissed or that they must convert their case to a Chapter 7 bankruptcy. Some of the difficulties in a Chapter 13 case include:
Monthly payments are required to the trustee.
By filing a Chapter 13 petition and plan, the debtor is agreeing to pay the court trustee a certain amount of money each month to be distributed to the debtor’s creditors. If a debtor is unable to continue making the payments as promised, his or her bankruptcy case can be dismissed.
Monthly payments may increase as income increases.
If the debtor obtains a raise from his or her job or wins the lottery, the bankruptcy court trustee can require the debtor to pay more toward the bankruptcy plan. Similarly, any tax refund the debtor would receive from the federal or state government in any year in which the debtor is in bankruptcy will go to the court trustee for disbursement to the creditors
Your Memphis Chapter 13 Bankruptcy Lawyer Can Answer Your Questions
Declaring bankruptcy is a difficult decision. The experienced and personalized advice and counsel you receive from Douglass & Runger, Attorneys at Law lawyers can help you determine whether this step is in your best interests. Contact Douglass & Runger, Attorneys at Law, today by calling (901) 388-5805 and discuss your case with one of their knowledgeable Memphis Chapter 13 bankruptcy attorneys.