Chapter 13 - The "Wage Earner's"

BANKRUPTCY

The Law Offices of Doustkam & Associates can help you achieve the financial freedom you need and the fresh start you deserve.  Our attorneys have a wealth of knowledge and experience in representing individuals and businesses in financial distress, which allows us to assist you in discharging those debts you can’t afford to pay.

Chapter 13 Bankruptcy – Generally 

Unlike a Chapter 7 Bankruptcy, Chapter 13 Bankruptcy can allow you to keep your property and repay your debts over a specified period of time; typically 3 to 5 years.  Your repayment plan (or “Chapter 13 Plan”) needs to be approved by the Bankruptcy Court.  Once your Plan is approved, you begin making payments pursuant to the plan, and when your Plan is complete, any remaining unpaid debts will be discharged in full. 

During your FREE consultation, you will meet with one of our experienced bankruptcy attorneys who will explain your rights and will help you understand the process and consequences of a chapter 13 bankruptcy filing, thereby allowing us to help you manage expectations during your case.  

At Doustkam & Associates, YOU are our utmost priority.  We work closely with our clients to take the confusion and stress out of the bankruptcy process, so that you can continue to live your life with the knowledge and confidence that your case is being handled with the utmost professionalism and care. 

Have questions about Chapter 13 Bankruptcy?  Read below for more detailed information.  Or, you can contact us anytime! 

Am I Eligible to File a Chapter 13 Bankruptcy?

Chapter 13 bankruptcy, which is also known as the “wage earner bankruptcy,” permits an individual to keep their property and repay their debts over an allotted period of time, typically three to five years. In a chapter 13 proceeding, the debtor establishes a payment plan to pay back all or a portion of their debt. At Doustkam & Associates we work closely with our clients to gage suitable payment plans based on the clients’ income, expenses, and necessities. 

To qualify for a chapter 13 filing, the debtor must have unsecured debt under $336,900 and secured debt under $1,010,650.  In addition, the debtor must complete a credit-counseling course from an approved credit-counseling agency.  The course can be taken online.  A list of approved courses can be found at the Department of Justice website.

Stop Foreclosures and Other Collection Action

Filing a Chapter 13 Petition will stop foreclosure proceedings on your property.  The filing of a chapter 13 petition automatically gives rise to an “automatic stay”.  This means that once you file, your creditors cannot take any actions against you, including but not limited to the pestering telephone calls, letters, the filing of lawsuits, and the foreclosure of your property.  This applies even if you file your chapter 13 petition on the morning of a foreclosure!

The Chapter 13 Petition and Schedules

One begins a chapter 13 case with the filing of a Petition.  The Petition sets forth the debtor’s basic contact information as well as their estimated debts and estimated number of creditors.  The Court charges a filing fee of $274.00 for chapter 13 petitions.  As noted above, the filing of the Petition imposes an “automatic stay” on collections that applies to all of the debtor’s creditors.  The automatic stay prohibits creditors from taking any collection actions against the debtor during the pendency of the case.

In addition to the petition, debtors must also file a series of schedules setting forth, among other information, the following:  a list of assets, a list of expenses, a statement of income, a list of debts (including the names of all creditors and amounts owed), and other financial-related information.

Other lawyers will charge you attorney rates to have paralegals or legal assistants prepare and file your petition and schedules.  At Doustkam & Associates, ALL of your documents are prepared and reviewed by a licensed attorney with expertise in the applicable laws, rules, and regulations.  Other firms may also charge you additional fees to prepare and file any changes or amendments to your schedules.  If revised forms are required, Doustkam & Associates will prepare and file those forms at no additional cost! 

Creditors and Priorities

In bankruptcy proceedings, there are three general types of creditors:  (1) Priority Claims; (2) Secured Claims; and (3) Unsecured Claims.

There are three types of creditor claims under a Chapter 13 proceeding: priority, secured, and unsecured. Priority claims are those debts with superiority like taxes, trustee’s fees, and attorney’s fees. Secured debt is debt incurred in exchange for collateral.  The most common type of secured debt is a mortgage or a car loan (the debt is “secured” by an asset such that the lender can take the asset if the debt is not repaid).  Unsecured debt is debt incurred with no collateral.  The most common type of unsecured debt is credit card debt, since you were extended credit without having to give anything in return. 

The Chapter 13 Repayment Plan & Confirmation Hearing 

Once the debtor files his or her petition and schedules, the debtor has ___ days to file a proposed repayment plan.  The repayment plan sets forth a monthly amount that the debtor will be required to pay to the Chapter 13 Trustee for a period of 3 to 5 years.  If the creditors believe that the plan provides for insufficient repayment of the debtor’s debts, the creditor can file a “competing plan” to propose a different repayment plan. 

Once the debtor and all creditors have filed their proposed and competing plans, the court holds a “Confirmation Hearing” to “confirm” the debtor’s plan.  If the debtor’s plan is not confirmed because of the creditor’s objections, the debtor can file an amended plan, and the court holds hearings until a plan is confirmed.  Once a plan is confirmed, the debtor must begin making payments pursuant to the plan to the Chapter 13 Trustee.  The Chapter 13 Trustee then distributes the payments to the creditors for the duration of the plan. 

If the debtor misses even one payment, their case may be dismissed by the court.  Once the payment plan is complete, any remaining unpaid debts will be discharged. 

Debtor Education

Before the Court will discharge your debts, each debtor is required to complete an approved “debtor education” course.  Similar to the credit counseling course, debtor education is meant to provide you with the tools to make the best use of your fresh start.  The course will teach you how to manage a budget, use credit wisely, and generally how to avoid a future bankruptcy filing. 

Our attorneys will guide you through the Chapter 13 process and construct a repayment plan that is viable for each client’s situation.  We aggressively represent our client’s interests throughout the whole process to ensure that our client has the opportunity to resolve their debts in a reasonable and affordable manner.  

Most of our Chapter 13 services are on a one-time flat fee basis.  Contact us today for your FREE consultation and let us help you take the first step towards financial freedom!