When To File Bankruptcy Chapter 13
Deciding when to file a Chapter 13 bankruptcy should be done with the assistance of your bankruptcy attorney. First, clients must decide whether a Chapter 7 or a Chapter 13 is the best fit for them. Our office gathers information from you over the telephone in order to initially decide this. The analysis is based on your income, your assets and your debt.
Chapter 7 Is Not Always The Best Option
There are times when a client will have the choice between a Chapter 7 and a Chapter 13 bankruptcy, yet still choose the Chapter 13. In Chapter 7, if you have assets which can not be exempt, the bankruptcy trustee may attempt to sell those assets. Vehicles and homes are two primary examples of such assets. Alternatively, a Chapter 13 trustee will not try to sell your assets. Instead, your payment in Chapter 13 is a function of the equity in those assets.
You may also have transfers to friends or family which could prevent the successful filing of a Chapter 7; however, those transfers are treated differently in a Chapter 13 and you can still receive your discharge. If a transfer is characterized as a gift or a preference, it may change your monthly Chapter 13 payment. This change is usually insignificant over a five year repayment plan in Chapter 13.
Once you decide that Chapter 13 is the right option for you, we will help you decide WHEN to file your Chapter 13 bankruptcy.
The Timing Of Your Chapter 13 Filing
There are some instances where the timing of your bankruptcy filing is determined by outside forces. If you are facing a foreclosure, you will need to file prior to the finalization of the foreclosure sale. This filing will halt the foreclosure and allow you to “catch up” on the mortgage during the five year repayment plan in bankruptcy. Additionally, if a creditor is pursuing a judgment against you, filing prior to the entry of judgment (whenever possible) makes for a smoother filing. In any case, the bankruptcy will address the judgment and the underlying debt.
Tax Debt In Chapter 13
Depending upon the age of your tax debt, it may be advisable to wait a few months or even longer to file your Chapter 13. The difference could mean paying back thousands of dollars vs. paying pennies on the dollar. The rules regarding tax debt and how it is addressed in bankruptcy are complex, but our office will help you sort through the considerations. In any case, Chapter 13 will address all of your tax debt by either treating it as unsecured debt, or putting you on a repayment schedule during the five year repayment time frame.
Vehicle Debt In Chapter 13
Another consideration regarding the filing of your Chapter 13 relates to the age of your automobile debt. If you have a car with a loan balance, we will ask you how long you have been paying on the loan. Depending upon the age of the loan, you may be entitled to reduce the loan balance—and typically the interest rate—by way of your bankruptcy filing. This can produce amazing savings and turn a vehicle into a great asset at the end of the Chapter 13 when you receive your discharge.
Speak With A Charlotte Bankruptcy Lawyer Today
Considering filing a Chapter 13? Stop reading a call us. In a few minutes, we can answer your questions, provide peace of mind, and help put together a game plan for addressing your concerns and moving forward. You can reach us at 704.749.7747 or click HERE to request a consultation and an attorney will call you today.