Bankruptcy Solutions Through Chapter 13
The Chapter 13 bankruptcy attorneys at Dennery Law know that periods of unemployment, family emergencies, and unexpected expenses happen to all of us. Falling behind on a mortgage, car payment, and/or taxes is sometimes unavoidable. Maybe you are self-employed and could not afford to pay your taxes. Maybe you bit off more than you can chew, and your car payment is holding you back. By now, you realize that making minimum payments on your credit cards is getting you nowhere. The debt settlement programs, loan modifications and compromises with state taxing agencies have not worked either. Time inevitably runs short, and your creditors are not taking “later” for an answer.
Most people under financial stress lose perspective and endure years of embarrassment and degrading collection calls. Many cannot answer the phone, open their mail, and become isolated from their family and friends. Our clients make a plan to stop the vicious cycle and start on the road to financial recovery by filing a chapter 13 bankruptcy.
Dennery Law helps individuals obtain debt relief under the bankruptcy code. Let’s talk about your
debt and how an experienced bankruptcy attorney can help you start fresh. We are available for
telephone consultations at no charge to you. In-person or remote appointments are available on
weekdays, evenings, and weekends in Lexington, Louisville, and Northern Kentucky.
What Is Chapter 13 Bankruptcy?
Under a Chapter 13 bankruptcy, an individual or a married couple proposes a plan of reorganization that allows for the repayment of personal debt over three to five years. A Chapter 13 trustee is appointed to ensure that the plan complies with the bankruptcy code. For the duration of the plan, you contribute your disposable monthly income to the Chapter 13 trustee who in turn administers and pays the late payments to your mortgage and car lenders, your attorneys’ fees, and, if there is any money left over, your general unsecured creditors. You are free to focus on your day-to-day life and working on a plan for the future. The Chapter 13 trustee takes care of the rest.
The beauty of Chapter 13 personal bankruptcy is that you have three to five years to catch up on late car or mortgage payments and pay for your attorney fees, while under the protection of the bankruptcy automatic stay. Under chapter 13, you are required to pay , at a minimum,, enough to cover your arrears to secured lenders, your attorney fees, and your tax debt over not more than five years. In most cases, the monthly payment to the chapter 13 trustee is less than what you pay outside of bankruptcy. The goal is to propose a plan that allows you to maintain a decent standard of living which you are reorganizing your debts.
In many chapter 13 cases, your credit cards, medical bills, and personal loans are discharged without any payments at all. For high-income earners that have sufficient disposable income, you may pay 100 percent of your general unsecured debt, but at your own pace and without the high-interest rates and penalties. At the completion of the plan, you get the peace of mind that comes with knowing that you did your best in a difficult situation and that you can look forward to your future rather than dreading your past.
Do I Qualify for Chapter 13?
Individuals and married couples with regular income can file for Chapter 13 protection. Regular income includes income for social security and/or pensions, hourly wages and salaries, as well as income realized by sole proprietors, the self-employed, landlords, or even small business owners. Chapter 13 bankruptcy is only available to individuals who have not more than $__________ in debt, including car loans, mortgage, and general unsecured debts like credit cards, medical bills and personal loans, and student loans. For a self-employed person or small business owner with debts can easily exceed the debt limits set forth in chapter 13 after accounting for personal guarantees and personal liability on business-related loans and related tax liabilities. In those cases, a individual chapter 11 should be explored.
Regardless of your situation, the chapter 13 bankruptcy attorneys at Dennery PLLC are here to help you determine if chapter 13 is right for you. We are available for telephone consultations at no charge to you. In-person or remote appointments are available on weekdays, evenings, and weekends in Lexington, Louisville, and Northern Kentucky.
Get a Fresh Start with Chapter 13 Personal Bankruptcy
In most cases, the decision to file for chapter 13 bankruptcy is a difficult one. An individual must carefully weigh the benefit of entering into a re-payment plan with a commitment period of three to five years. Filing for Chapter 13 bankruptcy will provide you with immediate relief from virtually all creditor actions, including debt collection calls, lawsuits, evictions, utility disconnects, foreclosures, judgments, garnishments, and/or repossessions. Our clients take advantage of the immediate relief to regroup. develop a realistic repayment plan, and emerge from bankruptcy with confidence.
Under Chapter 13 a fresh start means:
- Catch up on past due to mortgage and/or car payments at your own pace.
- Pay back what you can afford, while maintaining a decent standard of living
- Maintain day-to-day expenses, rebuild credit, and move forward confidently.
Can I Keep My Home Under Chapter 13?
Overall, chapter 13 bankruptcy is about fairness. The main concern under the bankruptcy code is when a person has valuable assets and has sufficient income to afford to pay at least a portion of what is owed to your creditors. If you can afford to pay off some back taxes, late mortgage, and car payments, and/or 401(k) loans, a Chapter 13 bankruptcy gives you the ability to do so over time, at a manageable pace, and without liquidating your assets. In the large majority of cases, you will keep your assets, including your retirement accounts, your real property, and your vehicles so long as you comply with the Chapter 13 plan confirmed by the court. Bankruptcy exemptions allow you to keep a certain amount of equity in your personal property. Bankruptcy personal exemptions apply to:
- A portion of the equity in your personal residence
- Your clothing, furnishings, and household goods
- Jewelry, up to a certain value
- Pensions and retirement account (no limitations)
- Tools of the debtor’s profession, up to a certain value
- damage awards for personal injuries suffered before or after the bankruptcy case is filed.
Does Chapter 13 Affect My Credit Score?
What ruins an individual’s credit score more than anything is high credit card balances, late payments, and charge offs. Indeed, your payment history counts for about 35 percent of your FICO score, while your available credit limit makes up to 30 percent of your FICO score. A charge off signals to a potential lender that you are a bad credit risk. It is true that a bankruptcy filing has an immediate and negative impact on your credit score. However, compared to late payments, high credit usage, collections actions and charge offs, bankruptcy is a lot less harmful than you may believe.
Once you file for bankruptcy, the credit reporting on late payments stops, which in turn stops negative reporting each month after you file. Also, your general unsecured debts are adjusted in a chapter 13 bankruptcy, which lowers your existing balances, and over time your credit score improves instead of declining. Reporting on mortgage payments and care loans paid outside of the chapter 13 plan helps your credit, so long as you make timely payments.
It takes time and concerted effort to rebuild credit following a bankruptcy case. While a Chapter 13 filing remains on your credit report for up to 9 years, it is possible to begin repairing credit immediately. If you are in a position to do so, increasing your income is the first thing to focus on. Building credit through secured credit cards and establishing a good payment history is crucial. Rebuilding after filing for bankruptcy is about making timely payments on all car or mortgage loans and new credit cards, and never taking on more than debt than you can afford.
Dennery Law helps individuals obtain debt relief under the bankruptcy code. Let’s talk about your debt and how an experienced bankruptcy attorney can help you start fresh. We are available for telephone consultations at no charge to you. In-person or remote appointments are available on weekdays, evenings, and weekends in Lexington, Louisville, and Northern Kentucky.