Chapter 13 Bankruptcy Law
Chapter 13 bankruptcy is also called debt consolidation, and it can be a good option for those with regular income who are having trouble keeping up with the regular monthly payments, facing foreclosure, or for those who owe significant past tax debt. A chapter 13 bankruptcy stops a foreclosure and wage garnishment immediately and can allow debtors to spread out mortgage arrears over 5 years which avoids a foreclosure.
What Is Chapter 13 and How Can It Help You?
The Seattle chapter 13 bankruptcy lawyers at Symmes Law Group assist debtors in filing for chapter 13 bankruptcy. Chapter 13 of the United States Bankruptcy code operates much differently than chapter 7. In a chapter 13 bankruptcy, debtors enter into a 3 to 5 year repayment plan of their debts. The monthly repayment amount is based on household disposable income, family size, mortgage arrears, secured debts and priority debts among other things. Debtors are required to make monthly installment payments to the Western (or Eastern) District of Washington Chapter 13 trustee. After the debtor has paid on their debts for the 3 to 5 year repayment period, all unsecured non priority debts that have not been paid off will be discharged. The amount you have to pay unsecured creditors will be based on your available disposable income as determined by the means test or your current income and expenses if applicable. If any payments are missed, your case may be dismissed and you will not receive a discharge of your debt. A chapter 13 bankruptcy is intended for debtors who are not good candidates for a chapter 7 bankruptcy due to various reasons such as a debtor’s income being too high, a second mortgage being eligible to be stripped and discharged, arrearages on a home mortgage needing to be made up to stop a foreclosure, or if the debtors have filed a chapter 7 bankruptcy in the last 8 years.
Explanation from a Chapter 13 Bankruptcy Lawyer in Seattle
A chapter 13 bankruptcy is not for everybody as a debtor must have enough disposable income to put into a payment plan. A debtor’s disposable income is calculated by looking at the households expenses subtracted from the household income. When you retain a bankruptcy lawyer at Symmes Law Group we will calculate a repayment plan that will be confirmed by the bankruptcy court and allow for the repayment of all of your priority debts in conjunction with payments made outside the payment plan on secured debt. Once we file your case, you will be subject to what is called the automatic stay period. The automatic stay is part of federal bankruptcy law which says that creditors may not collect on debts without first getting relief from automatic stay from the bankruptcy court. This means that while you are maintaining your payments in a chapter 13 repayment plan, creditors may not garnish your wages, bank accounts or make harassing phone calls.
What Is The Chapter 13 Bankruptcy Process?
For most people, the bankruptcy process starts with an internet search or a suggestion from a family member or a friend about how chapter 13 bankruptcy can improve your financial situation. The next step is for you to reach out to a bankruptcy lawyer who can best advise you of your options and whether chapter 13 bankruptcy makes sense for your situation as everybody has different circumstances which may require other courses of action. Symmes Law Group offers a free initial consultation either at the office or by phone and you can set this up by e-mailing [email protected] or calling us at 206-745-4597.
The next step in the chapter 13 bankruptcy process is figuring out whether you qualify for a chapter 13 bankruptcy and whether it makes sense. This will be determined in most situations during your initial consultation. Your bankruptcy attorney will review your family’s income, household size, assets and debts among other considerations. As of June 21, 2022 a debtor must be below the required debt limit to file for Chapter 13 bankruptcy. That debt limit is $2,750,000 of secured and unsecured debt combined. This debt limit is due to sunset after 2 years as it came into law as part of the Bankruptcy Threshold Adjustment and Technical Corrections Act. Once the consultation is complete you should have a good idea whether you will be able to file and qualify for a chapter 13 bankruptcy. At the conclusion of the free consultation, you will be e-mailed detailed instructions on what information you will need to gather up and provide to our office in order to assist you with filing for chapter 13 bankruptcy. These documents include a questionnaire in which you will be required to list all of your assets, income, expenses, and debts while also proving information related to specific bankruptcy related questions. In addition, you will be required to provide your last 2 years of tax returns, last 6 months of pay stubs, a signed retainer agreement and any third-party debt collection notices that you may have received. You may provide this information in person at the office, through a scanned PDF in e-mail or by faxing the information to 206-905-2993.
Once the information is received and your attorney fee paid (either by check or debit card) give your attorney at least a week to prepare your petition to file with the Federal Bankruptcy Court. During the prep process a copy of your most recent credit report is obtained and your attorney will follow up with you through e-mail about any follow up questions or additional information that is needed. As part of the process, you will also need to complete a credit counseling class online which must be completed prior to filing your chapter 13 bankruptcy case. At the end of this process your attorney will also ask you whether you want to review and sign your documents in person at the Seattle office or they can also be provided for signatures through e-mail or fax. Once your petition is signed, your case will be filed which usually happens on the same day. At the signature meeting you will be asked to provide any new paystubs that your attorney does not have already as well as bank printouts that show your current balance as of the date of filing and 30 days of transaction history. Also, you should be aware that your first chapter 13 plan payment is due within 30 days of case filing and can be made online. Debtors can also track their case online here.
In chapter 13 bankruptcy many debtors request that their attorney give a ball park idea of what payments may look like in their Chapter 13 case. Your attorney can calculate these payments on your behalf for a $500 charge + credit report fee which would be applied to your bankruptcy case if you decided to move forward with filing.
Do I have To Go To Court When I File Chapter 13 Bankruptcy?
As soon as your chapter 13 bankruptcy case is filed, the court will automatically assign a bankruptcy 341 hearing court date. This court date usually occurs in about 30-45 days from the date your case is filed. If you live in King county or Clark county your meeting will most likely be held on a Monday and is currently being held telephonically. If you live in Snohomish county or Pierce county, the court dates are also being held telephonically, usually on a Thursday. Attendance at the meeting is mandatory and you will need to make arrangements to attend the court hearing in advance. If English is a second language, then a translator may also be provided at the time of the hearing.
For most debtors the bankruptcy hearing goes by quickly and generally lasts a total of 5 minutes. With that said you should plan to be at court for about an hour as there could be 10 or more other cases on the calendar at the same time as yours so you may have to wait your turn. At the meeting you and your attorney will meet with a bankruptcy trustee who has been assigned to your case. The chapter 13 bankruptcy trustee has a duty to represent all of the creditors in your case. The chapter 13 trustee office reviews your bankruptcy petition, plan and assets to make sure you don’t have any assets that are above the exemption limits (rules that allow you to keep your stuff), looks to see if you made any transfers of assets that you were not supposed to and most importantly makes sure that you are proposing a repayment plan that meets the requirements of the bankruptcy and local rules. If you don’t have any assets that are above the exemption limits and you a proposing a proper plan, then your meeting will go by quickly as the trustee won’t have many non-standard questions for you. Here is a list of questions that you will be asked at the bankruptcy hearing:
- State your name and current address for the record.
- Please provide your picture ID and Social Security number card for review.
- Did you sign the petition, schedules, statements, and related documents and is the signature your own? Did you read the petition, schedules, statements, and related documents before you signed them?
- Are you personally familiar with the information contained in the petition, schedules, statements and related documents? To the best of your knowledge, is the information contained in the petition, schedules, statements, and related documents true and correct?
- Are there any errors or omissions to bring to my attention at this time?
- Are all of your assets identified on the schedules? Have you listed all of your creditors on the schedules?
- Have you transferred any property to friends or family members in the past two years?
- Do you have any claims to an inheritance or are you expecting to receive any lump sums in the next year?
- Have you previously filed bankruptcy? (If so, the trustee must obtain the case number and the discharge information to determine the debtor(s) discharge eligibility.)
- What is the address of your current employer?
- Is the copy of the tax return you provided a true copy of the most recent tax return you filed?
- Do you have a domestic support obligation? To whom? Please provide to me the claimant’s address and telephone number, but do not state it on the record.
- Have you read the Bankruptcy Information Sheet provided by the United States Trustee?
When Is My Chapter 13 Bankruptcy Case Complete and Final?
The next step in the chapter 13 bankruptcy process is to make any amendments that your creditors or the chapter 13 bankruptcy trustee has requested. Usually this is done by filing an amended plan which resolves any objections filed by the chapter 13 trustee your creditors. Once all the proper amendments are made and your creditors have submitted proofs of claims (proof that you owe money) your case will be confirmed. When your case is confirmed that means that the chapter 13 trustee has approved your chapter 13 plan along with a federal bankruptcy judge who files an order of confirmation. Upon confirmation your creditors will start to receive payments shortly thereafter. Prior to confirmation any monies paid by you is held by the Chapter 13 trustee’s office unless there were any adequate protection payments assigned in your chapter 13 plan.
If you complete your repayment plan for 36-60 months, you will receive a discharge order stating that any remaining unsecured debts have been discharged. Prior to you receiving a discharge order you must compete a second credit counseling class called the financial management class. This should be done within 60 days after your 341 hearing or else you case could be closed without a discharge. Once you have completed the class and you provide the certificate of completion your attorney will file it with the bankruptcy court. The discharge order is very generic and states that you have been discharged of your unsecured debts unless they are certain types of debts that are not dischargeable. Soon after the discharge notice is issued your case will be formally closed and the process will be complete.
How Much Does Filing For Chapter 13 Bankruptcy Cost?
The legal fee’s in bankruptcy can vary as not all cases are the same or one size fits all. Your attorney will discuss the legal fee’s with you during your initial consultation. With that said all bankruptcy attorneys must collect the legal fees up front to avoid the fees being discharged in the bankruptcy, however Symmes Law Group does offer convenient payment plans which allow you to retain Symmes Law Group and stop all calls from creditors and much of the legal fee can be paid through your Ch. 13 plan in most circumstances. In addition to the legal fee the bankruptcy court charges a filing fee which is $313. Additionally, your attorneys will obtain a credit report in which the company providing the report charges a fee of $37/person.
Once you have paid your up-front portion of the legal fee, a bankruptcy attorney will start work on your chapter 13 bankruptcy petition and plan in preparation for filing. Once we file your case, the automatic stay period will begin. The automatic stay is part of federal bankruptcy law which says that creditors may not collect on debts without first getting relief from automatic stay from the bankruptcy court which is rare. This means that after we file your bankruptcy petition, we can stop wage garnishments, foreclosures and harassing phone calls. Our fees are affordable and competitive with most attorneys in the area. Call our Seattle bankruptcy lawyers today at (206) 682-7975 to schedule your free initial consultation to learn more.
For answers to clients most commonly asked questions about chapter 13 bankruptcy please visit our Chapter 13 bankruptcy FAQ.