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How Does Chapter 13 Work?

The way Chapter 13 works is the Debtor proposes a Chapter 13 Plan to the court. If approved, the Debtor will make monthly payments directly to the Chapter 13 Trustee’s office. The Chapter 13 plan can be used to address delinquent secured debt such as home mortgage or vehicle loans. It will also address your unsecured debt, such as credit card debt and medical bills.

Your “Ability To Pay” Is Key

A part of figuring out “How does Chapter 13 work” is understanding that Chapter 13 requires you to commit your disposable income to your Plan. This means you and your Charlotte bankruptcy attorney will work together to formulate your budget. You are allowed to account for all of your normal living expenses in doing so. The remaining amount becomes the better part of your Plan payment.

Your Chapter 13 Plan Has Components

If you have secured debt, that debt will typically be paid through your Plan. Additionally, you can use Chapter 13 to get ‘caught up’ on secured debt if you’re behind. An example would be making up missed mortgage payments or late car payments. In this case, your disposable income will be used first to catch up on secured debt, and the remainder will go to your unsecured creditors.

To determine an estimate of your Chapter 13 Plan payment, you should really speak with your Charlotte bankruptcy attorney. While it’s possible to file a Chapter 13 bankruptcy without an attorney, it’s typically a very complicated formula. Your bankruptcy attorney will help to assure that your plan is filed in accordance with the rules of Chapter 13. This increases the chance that your plan is recommended for Confirmation by the Chapter 13 Trustee.

Considering Chapter 7 Instead

The primary reasons to file Chapter 13 instead of Chapter 7 are:

Too Much Income

Too Many Assets

You Need To “Catch Up” On Mortgage Or Car Payments

You’ve Already Filed Chapter 7 In The Last 8 Years

Your bankruptcy attorney can help you decide if Chapter 7 or Chapter 13 is right for you. Both options provide you with a great solution to being overwhelmed by debt.

Speak With A Chapter 13 Bankruptcy Attorney Today

If you are considering filing bankruptcy, you should exercise your option to speak with a Charlotte bankruptcy attorney. The call is free and you will come away with a much better understanding of your options. You can reach us at 704.749.7747 or click to request a FREE CASE EVALUATION, and we will be in touch shortly.

Further Reading

If this article was helpful, you may find other helpful articles on our Bankruptcy Blog. Thank you for visiting the website—we hope it has been helpful. You’ll find articles about your Credit Score In Bankruptcy, Chapter 7, Bankruptcy And Car Loans, and How Creditors Are Notified About Your Bankruptcy.

Bankruptcy And Car Loans

This article will help address the concept of bankruptcy and car loans. One of the myths of bankruptcy is that you can’t keep a car when filing a Chapter 7 or Chapter 13. Another myth is that old car loans are not addressed by bankruptcy. There is good news regarding both of these situations.

Protecting The Equity In Your Car

When you file bankruptcy, the primary question you face regarding your car is related to equity. Equity is the difference between the fair market value of your car and the loan balance. If your car is worth $10,000 and you have a loan balance of $7,000, you have $3,000 in equity. Equity is an asset in bankruptcy and you must protect or “exempt” it by using the appropriate bankruptcy code exemption.

Generally, there are two exemptions you can apply to vehicle equity. First, there is a specific exemption under N.C.G.S. Sec. 1C-1601(a)(3). This allows for an exemption of $3,500 in equity in a vehicle. In the analysis above, claiming that exemption would protect your car. If you had additional equity above $3,500, you could also elect to use the Miscellaneous Property “Wild Card” exemption under N.C.G.S. Sec. 1C-1601(a)(2), which gives you another $5,000 to protect any property you like.

Keeping Your Car In Bankruptcy

If you want to keep your car in bankruptcy, after protecting any equity you have, you will then need to reaffirm your car loan. The general rule is if you want to keep the property, you need the keep the loan that comes with it. This is easy to do. When you file your bankruptcy, you simply elect to reaffirm the debt. Your vehicle lender will prepare a reaffirmation agreement at the same terms you currently have. You will sign and file this document as part of your bankruptcy process. As a result, your payments will resume and you can keep your car.

Surrendering Your Car In Bankruptcy

One upside to the analysis of bankruptcy and car loans is that you can also choose to surrender your car. You may choose to do this if you have negative equity or simply know the car needs repairs and you don’t want to keep it. By surrendering the property in bankruptcy, you are protected from your vehicle lender pursuing you for any loss they take on the sale of the vehicle.

Vehicle Repossessions In Bankruptcy

If you have prior vehicle repossessions, bankruptcy will address that lingering debt as well. If you’re filing bankruptcy and old car loans are still showing on your credit report, they will be discharged as part of the bankruptcy. This eliminates your exposure to these items.

Speak With A Charlotte Bankruptcy Attorney

If you are considering filing bankruptcy, it’s important that you speak with a Charlotte bankruptcy attorney. The call is free and you will come away with a much better understanding of your options. You can reach us at 704.749.7747 or click to request a FREE CASE EVALUATION, and we will be in touch shortly.

Emergency Bankruptcy Filing

If you need an emergency bankruptcy filing, we can help. Most emergency bankruptcy filings are for the purpose of stopping a foreclosure in North Carolina. Provided you file your bankruptcy within 10 days after the official sale of the property, the emergency bankruptcy filing will halt the foreclosure due to the very powerful Automatic Stay in bankruptcy, governed by the Bankruptcy Code at 11 U.S.C. Sec. 362.

What Happens Next?

We don’t need much information to file an emergency bankruptcy filing; however, the clock starts ticking on our duty to provide the remaining information required to complete your bankruptcy. Typically, the list of documents we need is:

  1. Drivers License and Social Security Card.
  2. Most current statements for each the following: vehicles, home mortgage.
  3. SIX months of bank statement from ALL bank accounts.
  4. Full copies of tax returns (Federal and State) for 2016 and 2017– both should have already been filed. If you are filing a Chapter 13 you MUST have filed the last 4 years of tax returns prior to having your bankruptcy case filed.
  5. Registration cards for all vehicles owned.
  6. Six months of pay stubs (matching the info entered through the online questionnaire).
  7. Declaration pages for all life insurance policies. These must show the type of policy, the amount of the policy, the beneficiary and the current value.
  8. Balance statements on all retirement (401k, IRA, etc) accounts, showing they are in fact retirement accounts and therefore entitled to be excluded from bankruptcy.

Delivery Of Bankruptcy Documents

Our office will work with you to retrieve this documentation from you as easily as possible. We accept (and prefer) PDF or electronic copies. We also have an online portal where you can upload the documents.

Emergency Chapter 13 Bankruptcy Filings

Most of the time in order to stop a foreclosure, you’ll file a Chapter 13 bankruptcy. We’ve written extensively about Chapter 13 filings on our blog. A Chapter 13 gives you the chance to continue to make your normal mortgage payment, and use the 5 year period to ‘catch up’ on the amount you’re behind. There are also numerous other benefits to a Chapter 13, depending on the type of debt you have. They include:

Lower interest rate on vehicle loans (Can I Keep My Car In Bankrutpcy?)

Lowering the balance on vehicle loans to the Fair Market Value of the vehicle

Paying pennies on the dollar to unsecured creditors

Painless voiding or exiting of contracts you do not wish to continue

Paying off taxes to the IRS or Department of Revenue (Taxes In Bankruptcy)

How Much Will My Chapter 13 Payment Be? (Chapter 13 payment factors)

Your Chapter 13 payment will be a function of how far behind you are on your mortgage, together with your ability to pay. Your ability to pay is based on your budget. Don’t worry, we work with you to present a budget to the court. Before you file, you’ll know your estimated Chapter 13 payment and should feel comfortable that you’ll be able to make the payment.

Speak With A Charlotte Bankruptcy Attorney Today

If you’re facing a foreclosure or even a wage garnishment, an emergency bankruptcy filing may be a great choice for you. Call us at 704.749.7747 to speak with an attorney today, or click for a FREE CASE EVALUATION and we will reach out shortly.

Charlotte Bankruptcy Attorney Reviews

Charlotte bankruptcy attorney reviews should be an important part of your decision to hire a bankruptcy lawyer. Often, reviews are less specific as to the results the bankruptcy attorney achieved and more specific as to the experience the individual had with the law office. This will help you make a decision between two attorneys or law firms that you think would be good choices for you.

Can I Rely On Charlotte Bankruptcy Attorney Reviews?

Generally speaking, you should be able to rely on attorney reviews on Google. Google has a trustworthy process for making sure reviews are genuine, and not just “made up” by the company trying to sell itself. You may also want to check facebook.com to see if the Charlotte bankruptcy attorney reviews on Facebook are similar to those on Google.

What If A Charlotte Bankruptcy Attorney Has A Bad Review?

Studies have shown that a law firm or business is actually more trustworthy if they have one or two bad reviews. In other words, you might be suspicious if the bankruptcy law firm had nothing but perfect reviews. It makes sense that after years of practicing bankruptcy, a law firm might have a few bad reviews from unhappy clients—unfortunately, it’s just a part of life for any business trying to serve the public.

Attorney Comments On Reviews

One thing you might look for in a bad review is whether the company or lawyer responded to the poor review. If they did respond, was their response one of regret that the person had a bad experience? Did the business blame the individual for the poor experience or outcome? The company’s response is a good way to judge how the company interacts with its clients or patrons.

Speak With A Charlotte Bankruptcy Attorney Today

Once you’ve read a law firm’s website to see if their material is relevant, and checked out their reviews, we recommend you call the firm. You should be able to speak with the bankruptcy attorney on the phone—not just a staff person. If the attorney is not available, you should expect a call back within 24 hours unless there are circumstances preventing it. If it takes a bankruptcy lawyer three days to return your call, you might predict that it will be tough to get your calls returned and your concerns addressed if you choose to work with that bankruptcy lawyer.

Request A Consultation

If you’d like to speak with a Charlotte bankruptcy attorney, give us a call. Part of our job is answering questions. We are happy to analyze your bankruptcy case, whether you end up filing with us or with another firm. What’s most important is that you find the right attorney for YOU. If we can help, we would love to. If we think another Charlotte bankruptcy attorney is a better fit, we can certainly recommend a few to you. You can reach us at 704.749.7747 or click for a FREE CASE EVALUATION and we will be in touch shortly.

Filing Bankruptcy Without Your Spouse

Considering filing bankruptcy without your spouse? You should discuss your situation with a bankruptcy lawyer before doing so. This article is meant to answer questions and concerns if you’re considering filing bankruptcy without your spouse.

What Debts Are Included If I File Bankruptcy Without My Spouse?

If you file bankruptcy without your spouse, any debt in your name will be included in the bankruptcy. This includes joint debt that you may have with your spouse. There are a few things to keep in mind, though. First, if you and your spouse have joint debt, you are both responsible for 100% of the debt. Second, a bankruptcy filing will only address your obligation under the debt. Lastly, while the Automatic Stay in bankruptcy may delay creditors from pursuing your spouse as a joint debtor, they eventually will pursue her for the debt. Furthermore, your discharge in bankruptcy will discharge your obligation under the debt, but leave hers intact.

Jointly Owned Vehicles In Bankruptcy

If you have a vehicle which is titled in both your name and your spouse’s name, filing bankruptcy without your spouse is still ok. When you file the bankruptcy, you will declare your 50% ownership of the vehicle. You will also need to use N.C.G.S. Sec. 1C-1601(a)(3) to exempt your portion of equity in any vehicle you own all or part of.

Primary Residence In Bankruptcy

If you and your spouse own your primary residence together and you’re filing bankruptcy without your spouse, you can claim a 100% exemption as Tenancy By The Entirety under 11 USC Sec. 522(b)(3)(B). Keep in mind that you must have created a tenancy by the entirety upon purchase of the real property. Your bankruptcy attorney will want to see a copy of your deed to confirm this. Lastly, this exemption protects your equity in the home against creditors in your name only. If you have joint debt, those joint creditors may be able to access the equity in your home to the extent it exceeds your allowable Homestead Exemption under N.C.G.S. Sec. 1C-1601(a)(1).

The Means Test When You File Bankruptcy Without Your Spouse

If you’re filing bankruptcy without your spouse, the Means Test calculations will differ slightly. First, your attorney should prepare a bankrutpcy petition considering your entire household income. When the petition is prepared this way, you can also deduct your entire household expenses. To the extent your spouse has income she does not contribute to the household, those funds can be subtracted out as a Marital Adjustment in the Means Test calculations—this may help you pass the Means Test in a Chapter 7 filing.

Speak With A Bankruptcy Attorney Today

If you’d like to speak with a bankruptcy attorney about filing bankruptcy without your spouse, we’re here to help. The call is free. You can reach us at 704.749.7747 or click for a FREE CASE EVALUATION and we will be in touch shortly.

No, bankruptcy does not cover student loans. Well, at least bankruptcy does not “get rid of” student loans. This is the starting point in the discussion regarding educational loans and bankruptcy. While student or educational loans are not discharged by bankruptcy, most clients find that filing a bankruptcy provides them with the powerful relief they need from other debt such as credit card debt and medical debt. With those items out of the way, most clients find they can actually make their student loan payments. Additionally, as discussed below, Chapter 7 and Chapter 13 will typically allow you to pause your payments on student loans while your bankruptcy is active.

The Exception To The Rule

Every rule has exceptions, and the same is true of student loans in bankruptcy. If you can prove that the payment of the loans will pose an undue hardship on you and your dependents, you may be able to get your student loans discharged in bankruptcy. Courts use the Brunner Test to determine if an undue hardship exists. It requires showing that: a) the debtor cannot maintain, based on current income and expenses, a “minimal” standard of living for the debtor and the debtor’s dependents if forced to repay the student loans; b) additional circumstances exist indicating this state of affairs will persist during the remainder of the repayment period, and c) the debtor has made good faith efforts to repay the loans. Brunner v. New York State Higher Educ. Servs. Corp., 831 F. 2d 395 (2d Cir. 1987).

Debtors can expect a vigorous defense to be put on by attorneys representing the lenders in these situations, and the cost of litigating this issue combined with the low chance at success leads most individuals to simply accept that these loans aren’t going away in bankruptcy.

How Does Bankruptcy Help With Student Loans

There are a few ways in which bankruptcy does help with student loans.

Chapter 7 Pauses Your Student Loans – During the roughly 120 days your Chapter 7 is open with the court, your student loan lenders are not allowed to attempt to collect money from you. This is due to the Automatic Stay in bankruptcy. This provides a welcome break from your loans for a few months. You can expect collection attempts to continue after the Chapter 7 closes.

Chapter 13  Options – In Chapter 13, you can elect to include your student loans in the Chapter 13 to be paid as unsecured debt. This amount is typically pennies on the dollar compared to what you’ve been paying. This is the equivalent of putting the loans on pause, much like in Chapter 7 above.

What Are The Next Steps

Take 15 minutes to have a free phone consultation. You will Speak with a bankruptcy attorney about your loans and other debts which are causing you to consider bankruptcy. Bankruptcy is a very powerful form of relief which immediately changes clients’ lives or the better. We are happy to discuss your options with you and there is no charge for the phone call—we’re happy to help. Call us at 704.749.7747 or click HERE to request a call from us. We know you have choices, we hope you choose to Recover With Us.

Bankruptcy For Unsecured Debt

If you are considering bankruptcy solely for unsecured debt, you will still have to pass The Means Test in bankruptcy. Typically, if the debt you wish to discharge in bankruptcy is unsecured, our goal will be to qualify you for a Chapter 7 bankruptcy filing. Whether your bankruptcy filing contains secured debt or is a bankruptcy for unsecured debt only, the process is very much the same. Lastly, you’re not alone– between 2005 and 2017, over 12 million individuals filed bankruptcy. Of those, over 8 million were Chapter 7.

Types Of Unsecured Debt

There are numerous types of unsecured debt which will be included in a Chapter 7 bankruptcy. Below is a list of the primary categories:

Credit Card Debt – Most credit card debt is unsecured

Line Of Credit – Most lines of credit are unsecured, though some banks use your checking and savings accounts as security for these debts. Your credit agreement will govern this.

Store Cards – Store card debt (Belk, Best Buy, Gap, etc.) is unsecured; however, the store can claim a security interest in the items you purchased. Most stores will not attempt this, but an example would be purchasing a large ticket item at Best Buy. The store may claim a security interest in the television or other electronics you purchased. This is not usually an obstacle in bankruptcy.

Pay Day Loans – Pay day loans are unsecured.

IRS Tax Debt – The IRS may have a lien related to your tax debt. In most cases they do not. IRS debt is typically treated as priority debt for bankruptcy. This means it survives the bankruptcy for unsecured debt. However, if your IRS debt meets the requirements for being treated as unsecured debt, we may be able to discharge the IRS debt with your bankruptcy filing.

State Tax Debt – The same is true of state tax debt.

Can I Use Credit Cards Before I File Bankruptcy?

If you use your credit cards within 90 days of filing bankruptcy, there is a presumption of abuse. This means that the court will presume you knew you were going to file bankruptcy and continued to use the cards without the intention to pay back the debt. As a result, any charges placed on the cards within 90 days of filing bankruptcy will survive the bankruptcy. While this will generally not interfere with your bankruptcy filing, it will mean you carry a balance after the bankruptcy.

It is best to wait 91 days from the last purchase on a card, before filing bankruptcy. After the 91st day, the presumption shifts in your favor. This means that your creditors would have the burden of proving you knew you were going to file bankruptcy and continued to use the card(s) leading up to bankruptcy. They would also have to prove you had no intention of paying back the debt. This burden is time consuming and expensive for the creditor, and they usually lose the argument. For this reason, debt which is 91 days old or older at the time of filing your bankruptcy will typically be included in the discharge.

How Long Does Filing A Bankruptcy For Unsecured Debt Take?

We have previously written about the time frame for a Chapter 7 from start to finish, and you can read that post: How Long Does Bankruptcy Take? Generally, our firm is ready to file when you are. For most clients, the ability to pay for the bankruptcy is what poses a delay in filing. Supposing you are ready to file bankruptcy and ready to pay for your bankruptcy, our firm can typically prepare your bankruptcy within two weeks.

Speak With A Charlotte Bankruptcy Lawyer Today

If you have questions about filing a bankruptcy for unsecured debt, call us today to get started. The phone call is free and part of our job is answering questions. You can reach us at 704.749.7747 or click for a FREE CASE EVALUATION and we will call you back today. We know you have choices. We hope you choose to Recover With Us.

Your tax refund is an asset in bankruptcy. This is true whether you file Chapter 7 or Chapter 13. Your refund is treated differently in each chapter, but generally, you can keep your tax refund in bankruptcy.

Chapter 7

In Chapter 7, your bankruptcy assets are any assets you already own or reasonably expect to own. A tax refund is a great example. If you have not filed your taxes yet, but you know that you will receive a refund, that refund is part of your bankruptcy estate. Because the refund does not represent income earned in the last 60 days, it cannot be exempted under N.C.G.S. 1-362. It can, however, be exempt under N.C.G.S. 1C-1601(a)(2). This is commonly known as your “Wild Card” exemption. It can be applied to any assets.

By claiming an exemption, you are exercising your right to protect certain assets. Your Wild Card exemption is available to cover up to $5,000 of assets. So, as long as your refund is $5,000 or less, you can use your Wild Card exemption to protect it. If you’re filing with a spouse, you both have a Wild Card exemption, for a total of $10,000 in Wild Card exemption available.

By protecting your tax refunds in bankruptcy with an exemption, your bankruptcy case can move forward without the bankruptcy trustee taking that asset. You will receive your discharge, and when you receive your tax refund, it’s yours to keep.

Another option is to receive and spend your tax refund in bankruptcy before you file. So long as you spend the refund on normal living expenses, you are not running afoul of the bankruptcy rules. Additionally, if you purchase household goods like furniture, you can still protect42those new purchases with your household exemption under N.C.G.S. 1C-1601(a)(4).

Tax Refund Already Received—A tax refund you have already received prior to filing, but have not yet spent, is part of the bankruptcy estate and treated like cash. You may be able to use exemptions to protect the money.

Tax Refund Expected—A tax refund expected but not yet received is also part of the bankruptcy estate to the extent it relates to income earned prior to the date you filed your Chapter 7 bankruptcy. As a worst-case scenario, you will be required to turn over the return to the trustee. However, your bankruptcy attorney can also use exemptions to protect the expected tax refunds in bankruptcy, the same way you can protect the money that is in a savings account. The important thing is to disclose the expected return and exempt it in the bankruptcy filing.

Tax Refund For Years After The Filing—A tax refund received for income earned during a tax year after the year you filed bankruptcy (and all future returns) is yours to keep. They are not part of the bankruptcy estate.

Chapter 13

If you are in Chapter 13, the same rules apply as outlined above for Chapter 7. However, these rules are only applicable to the year in which you are filing your Chapter 13. Because a Chapter 13 case runs for three to five years, you need to be concerned about future tax refunds in Chapter 13.

If you receive tax refunds in Chapter 13 in a year beyond your first year, you must disclose this refund to the Chapter 13 bankruptcy trustee. Generally, you are allowed to keep $1,000 per debtor each year. Additionally, if you have any unused Wild Card you can apply it to your tax refunds received in subsequent years. Lastly, if your tax return shows that your refund is due to an earned income credit or a child tax credit, the refund is yours to keep.

If you cannot protect your tax refund in Chapter 13 in the above manner, you can also petition the court to keep your refund due to the fact it is necessary for living expenses. An example would be that you have been putting off repairs to your home or vehicle, and the non-exempt tax refund will be used for those repairs. Quite often, clients are making ends meet but putting off normal and routine household expenditures to do so. For this reason, the court entertains a request to use your tax refund in Chapter 13 to get ‘caught up on household expenses.

Tax Refund Already Received—A tax refund you have already received will be treated as an asset. While the trustee may not take the tax refunds in bankruptcy, any assets you own play a role in determining the amount you will ultimately pay to creditors in Chapter 13. The refund, if it can not be exempted, may bump up your Chapter 13 payment.

Tax Refund Expected—The safe assumption regarding tax refunds in an ongoing Chapter 13 is that they will become the property of the trustee. While you may use exemptions to protect an expected return, the typical Chapter 13 plan is 36 to 60 months.

Tax Refund For Years After The Filing—The same answer as directly above applies here. The tax refund is yours to keep and is not part of the bankruptcy estate.

Adjusting Your Withholding In Bankruptcy

One allowable way to help ensure you don’t lose any money in Chapter 13 is to adjust your tax withholding. This way, rather than receive a large refund in bankruptcy at the end of the year, you receive more income each month. Your Schedule I and J filings in Chapter 13 should reflect this, and your overall budget will change slightly; however, it will help you avoid the annual chore of trying to prove to the Chapter 13 court that you should be allowed to keep your tax refund.

What Can I Do To Plan Around This?

In Chapter 7, you can spend your tax refund prior to filing. Or, make sure to put your attorney on notice that you expect to receive a return and be sure to exempt it or postpone filing until the asset has been spent on allowable items.

In Chapter 13, tax refunds in bankruptcy represent an ongoing issue, and the easiest way to manage it is to reduce your withholdings so that you’re receiving more in your paycheck on an ongoing basis rather than ‘storing’ up money with the IRS which will result in a large return.

If you do receive a refund in Chapter 13, disclose the return each year to the trustee. Each trustee’s policies (in different districts) differ. If you can show that you need some or all of the return for necessary expenses like home repairs or vehicle repairs, you may be able to keep some or all of the return. Your bankruptcy attorney should assist you in making this disclosure to the court, together with the argument that you have a need to use the return vs. it going to the trustee.

Speak With A Charlotte Bankruptcy Attorney Today

Bankruptcy is a very powerful solution with long-lasting positive effects. If you’d like to speak with a lawyer about filing bankruptcy, we’re here to help. Consultations are free and answering questions is part of the job. Call us at 704.749.7747 or click for a FREE CASE EVALUATION and we will reach out shortly.

How Much Will My Chapter 13 Payment Be?

Your Chapter 13 payment is a combination of a few factors. We discuss these factors in this post. If you have questions please call 704.749.7747 or click for a FREE CASE EVALUATION and we will reach out today.

Priority Debts

There are some debts which must be paid in full during the course of your Chapter 13 bankruptcy. A list is below:

IRS Tax Debt

State Tax Debt

Mortgage Arrears

HOA Arrears

Spousal or Child Support Arrears

Car Arrears

If you owe any of the above items at the time of your Chapter 13 filing, you must pay them through your Chapter 13 plan. If your plan is 60 months, you can divide the totals above by 60 to get your estimated monthly amount applicable to these items. If you do not owe any of the above items, you should discuss Chapter 7 with your bankruptcy attorney.

Ongoing Car and Mortgage Payments

Your mortgage on your primary residence will also be paid through the Chapter 13 plan. This is known as a Conduit Payment because it flows through the Chapter 13 trustee. This is to insure your mortgage creditor is protected in the Chapter 13 plan, ongoing.

Your ongoing vehicle payment will also be built into your Chapter 13 payment plan. In some cases, your interest rate can be lowered in the Chapter 13. Additionally, your vehicle loan balance may be lowered—your attorney can assist with this equation. Lastly, if you surrender your vehicle in Chapter 13, any loan balance above and beyond the blue book value will simply be treated as unsecured debt, discussed below.

Unpaid Attorney Fees

The Chapter 13 fee is set by the court at $4,500.00 plus the filing fee. Your attorney will require some of that to be paid up front. Any remainder will be built into your Chapter 13 plan payment.

Unsecured Debt

Your unsecured debt will typically be paid back at a very low percentage in your Chapter 13. First, you must present a budget to the Chapter 13 court. Then, you must propose that any remaining funds after all of your ongoing monthly expenses, be paid as part of your Chapter 13 payment. This amount varies depending upon your income and expenses, of course. Essentially, the remainder is used to pay the items above, and to pay a small amount to unsecured creditors.

One example of a Chapter 13 plan would be to propose to pay 10% to unsecured creditors. This means if you have $50,000 in unsecured debt (credit cards, medical bills, etc.), you would pay a total of $10,000 to those creditors during the course of the plan. Over  a 60 month plan, this equates to roughly $80 a month.

What Is Your Ability To Pay?

Ultimately, your Chapter 13 payment is a function of your Ability To Pay. In the end, you must show the court that your payment includes the mandatory items above, plus a small amount to your unsecured creditors, and lastly, that it also represents the most you can afford each month.

Changes To Your Chapter 13 Payment

If you income changes (up or down), your Chapter 13 plan payment may also change. This is because the plan payment is based on your ability to pay. As a result, you may be required  to update the court or your attorney periodically, as to your income.

The Trustee Fee

Lastly, remember the trustee receives roughly a 4% fee for every dollar that flows through the plan. If your Chapter 13 plan calculation comes to $1,000 a month, it will need to be increased to roughly $1,040 a month in order to pay the trustee fee.

Speak With A Charlotte Bankruptcy Attorney Today

If you have questions about Chapter 13 and would like to speak with a Charlotte bankruptcy attorney today, call us at 704.749.7747 or click for a FREE CASE EVALUATION. Consultations are free and we’re here to help.

Need A Raise? File Bankruptcy

Financial stress is a common form of anxiety and worry. In a recent CNBC article, it was reported that 30% of Americans say they are constantly stressed out about money. The stress is due not only to existing bills and debt, but also to the threat of unexpected expenses. If money is already tight, even the thought of a small unexpected expense can cause a great deal of anxiety.

Free Yourself From Financial Stress

There are two primary ways we can free ourselves from financial stress. First, we can make more money. While increasing your income is not an option for everyone, it does solve the financial problem for some Americans. So long as your expenses don’t increase with your income, you should be able to better manage your debt. For most of us, the idea of increased income is a good one, but the reality is we don’t have the option to do it or we would have done it long ago.

The second way to free yourself from financial stress is to reduce debt and expenses. If you’re like most clients we work with, you’ve already reduced your monthly expenses, and you now realize it’s the debt that is causing most of the stress. This is where filing a Chapter 7 or Chapter 13 bankruptcy can change everything.

Filing Bankruptcy Is Like Getting A Raise

It’s time to put the myths of bankruptcy aside and start focusing on the benefits of bankruptcy. Consider this: if you have $500 a month in debt payments you are making, your bankruptcy will eliminate those payments provided they are related to credit card debt, medical bills, or other unsecured debt. You were spending $500 of your post-tax money a month on those bills. Assuming you’re taxed at roughly 27%, that is roughly $700 a month in pay. When you calculate it annually, it comes to $8,400. Under this scenario, by filing bankruptcy, you effectively give yourself a $8,400 raise. For most Americans, a raise like that is a game changer. Add to that the fact that the debt is gone, and you realize financial relief is a few simple steps away.

But Isn’t Filing Bankruptcy Stressful?

No, filing bankruptcy is not stressful. We know our clients sometimes have an emotional response to the idea of filing bankruptcy. Once we’ve had an initial consultation and decided to make a decision that benefits us and our families, the idea of filing bankruptcy shows itself as a solution.  When we have a solution to our problems, we experience peace and joy—the opposite of stress and anxiety.

How Do I Get Started?

Getting started is so very easy. You simply make a phone call and discuss your options. The call will take about 20 minutes. After, you’ll be provided with a login and password where you can enter some specific information to help us determine if you qualify for Chapter 7. Most clients do, and those who do not can qualify for Chapter 13 in most cases. Either way, the debt goes away and peace is restored to your life.

Speak With A Bankruptcy Lawyer Today

Call us at 704.749.7747 or click for a FREE CASE EVALUATION and we will reach out to you. We know financial stress is tough. There is a solution, and we are proud to be part of it. We hope you choose to Recover With Us.