THE WAGE EARNER PAYMENT PLAN
The primary goal of a Chapter 13 Bankruptcy is to consolidate your debts and set up a manageable monthly payment. Chapter 13 bankruptcies are often referred to as a “Debt Consolidation,” or the “Wage Earners Plan.”
A Chapter 13 Bankruptcy may be the more appropriate type of bankruptcy to file to:
- If you have filed a Chapter 7 bankruptcy in the last 8 years.
- Stop Foreclosures and Repossessions
- Situations where the debtor is behind and wishes to catch up on home mortgage payments and/or car loans.
- Restructure/Lower Payments on Certain Non-Dischargeable Debts
- If you do not qualify to file a Chapter 7 Bankruptcy.
Payment of non-dischargeable taxes
Debtors can restructure their payments for car loans (if the loan originated least 2 1/2 years ago), child support arrears, postpone student loans, pay delinquent taxes and certain other non-dischargeable debts. You can also wipe out as much unsecured debt as possible (in some cases, over 90%) where the debtor is not eligible for Chapter 7 bankruptcy under the new bankruptcy law.
In a Chapter 13, a debtor must repay a portion of the delinquent unsecured debts over time in exchange for a discharge of any remaining unpaid debt at the conclusion of the repayment plan. Other Important Characteristics of a Chapter 13 Bankruptcy Include:
Chapter 13 Payment Plan
In a Chapter 13 bankruptcy, you are required to make monthly payments to a trustee for up to 60 months. The first payment is due 30 days from the date your case is filed. Depending upon the type of debts you are including in the chapter 13 plan, you may be making payments for little as 36 months at which time you would have completed all obligated payments in your Chapter 13 bankruptcy and your case will be completed. The amount, length of time, and structure of these payments is complicated and depends primarily upon the type(s) of your debts, your monthly income, and your monthly expenses. During a consultation with our office, we will advise you of all the details of your Chapter 13 payment plan if you so choose to file.
Keeping non- exempt property
As with filing a chapter 7 Bankruptcy, unless you have assets of significant of value and/or with significant equity, most people keep all of their property in a Chapter 13 Bankruptcy. If you own a home with no more than about $ 60,000 ( $90,000 if “elderly”) of equity, have furniture and household goods of average value and are willing to keep up your car payment(s), you will most likely keep all of your personal property. If may also be able to keep non-exempt property by paying its fair market value into your Chapter 13 plan.
Automatic Stay
As with filing a Chapter 13 bankruptcy, after you sign the Chapter 13 Petition, Payment Plan and schedules prepared for you by us, we will electronically file all documents with the Clerk of the United States Bankruptcy Court. Immediately upon filing, a protection Order is entered by the Court to protect you from all creditor action. The Bankruptcy Court orders all creditors to stop all harassing phone calls, lawsuits, threats, judgments, repossessions, and garnishments. This protection order is known as the “Automatic Stay”.
How Chapter 13 Affects Homeowners Behind in Their Mortgage Payments
A Chapter 13 is often preferable for homeowners who are in arrears on their house payments and are facing a foreclosure. Under Chapter 13, the debtor has up to 60 months to cure an arrearage so long as the current mortgage payments are being made. Also, the debtor may have an opportunity to market and sell the residence rather than lose the homestead equity in the house to a foreclosure. If your house is in foreclosure your Chapter 13 bankruptcy must be filed, prior to the sale date in order to restructure the late mortgage payments.