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Frequently Asked Questions about Chapter 13

Q: How does a Chapter 13 bankruptcy case work?

A: Chapter 13 of the federal Bankruptcy Code allows a consumer to repay all or a majority of his or her debts through a payment plan approved by the Bankruptcy Court. When the plan is in place, creditors generally are prohibited from collecting debts directly from the debtor. Instead of paying his or her creditors directly, the debtor pays a certain amount every month to the Chapter 13 Trustee, and the Trustee distributes the money to the creditors, as provided in the Chapter 13 plan. When the last payment is made, the debtor is no longer liable for the remainder of his or her dischargeable debts.

Q: How long does it take to complete a Chapter 13 plan?

A: A Chapter 13 plan lasts for three years unless the debtor can pay off all debts in less time. Under certain circumstances, the court may approve a plan that lasts as long as five years.

Sometimes, bankruptcy is sometimes set off by one unfortunate or tragic event; some consumers simply cannot curb overspending. Filing bankruptcy solves only part of the problem, and there is an urgent need for the continuing assistance of a knowledgeable attorney who can provide solutions to financial problems.

Florida Chapter 13 Bankruptcy Lawyer

Chapter 13 is a very common form of bankruptcy. It involves a reorganization strategy that allows you to be involved with the creation of a payment plan to resolve your debt over a set period of time. For more than 30 years, attorney Norman L. Schroeder, II, P.A. has helped people design a plan that will help them move past the cloud of debt and into a bright and open future. He is available to help people in Lake Worth, Boynton Beach, Palm Beach County, and the surrounding areas ward off threats of foreclosure and harassing creditor phone calls.

To find out more about chapter 13 bankruptcy, please view the information below. To discuss relieving your debt, contact Norman L. Schroeder, II, P.A. at 561.642.8884 to schedule a free initial consultation.

Chapter 13 - An Overview

The bills are stacking up, demanding calls and letters are arriving with increasing frequency and despite the best of efforts, the overdue debts just cannot be paid. In such cases, filing bankruptcy under Chapter 13 of the Bankruptcy Code may provide a solution to what seems like an insurmountable problem. Once considered a last resort, bankruptcy has evolved into an accepted method of resolving serious financial problems. If you are facing serious financial challenges, it is important to seek the counsel of an experienced bankruptcy attorney to determine whether filing under Chapter 13 is right for you.

Bankruptcy law provides two basic forms of relief: (1) liquidation and (2) rehabilitation or reorganization. Most bankruptcies filed in the United States involve liquidation, which is governed by Chapter 7 of the Bankruptcy Code. A reorganization or rehabilitation bankruptcy under Chapter 11 or 13 of the Bankruptcy Code is, however, the option often preferred by the courts. Under Chapters 11 and 13, creditors may be provided with a better opportunity to recoup what they are owed.

Alternatives to Filing Bankruptcy

Debtors who have faced obstacles to paying off their debts when due have no doubt received more than their fair share of demanding letters and phone calls, and the thought of filing bankruptcy and getting rid of their debts, and thus the constant demands, can be quite appealing. Before making a decision to pursue that route, which can have long-term effects on credit rating and the ability to make large purchases, debtors may wish to consider other, less drastic alternatives. Talking through these options with an experienced bankruptcy attorney can help make sense out of the myriad complex and confusing choices that must be made at an already stressful time.

Debts that Remain After a Chapter 13 Discharge

A Chapter 13 discharge affects only those debts provided for by the plan. Any debts not provided for in the plan will remain, and the debtor will have to pay them in full, even after discharge. Additional exceptions to a Chapter 13 discharge include, generally, claims for spousal and child support; educational loans; drunk driving liabilities; criminal fines and restitution obligations; and certain long-term obligations, such as home mortgages, that extend beyond the term of the plan. A lawyer experienced in bankruptcy law can explain which debts are “erased” as a result of a Chapter 13 discharge and which will remain the obligation of the debtor.

Effects of a Salary Increase on a Wage-Earner Plan Under Chapter 13

When a Chapter 13 debtor enters into a wage-earner plan, he or she commits the next three years’ disposable income — that portion of the debtor’s income not required to meet the necessary needs of the debtor and his or her dependents — to the repayment of debt. Often, a debtor’s income will increase after the plan is in place, and the question arises as to what becomes of this increase in income. Bankruptcy lawyers can answer these and other Chapter 13 questions as they arise, providing information, reassurance and competent and zealous advocacy throughout the bankruptcy process.

Rebuilding Your Credit After Bankruptcy

Bankruptcy has a long-lasting impact on a person’s credit rating, and on his or her ability to obtain credit in the future. The impact is not entirely negative. In some cases, filing bankruptcy may actually improve a bad credit rating. In addition, there are a number of steps a person can take to improve his or her credit after bankruptcy. An experienced bankruptcy attorney can offer valuable advice about how credit can be improved after a bankruptcy, and how to work for a better financial future.

Chapter 13 Resource Links

United States Bankruptcy Courts
The official Web site of the United States Bankruptcy Courts includes a variety of useful information about bankruptcy.

Bankruptcy Glossary
This Web site includes a glossary on bankruptcy terminology that explains, in layman's terms, many of the legal terms that are used in cases filed under the Bankruptcy Code.

Bankruptcy Fees
This Web page, maintained by the Administrative Office of the US Courts on behalf of the US Courts, contains the fees associated with a bankruptcy filing under a particular chapter.

Bankruptcy Forms
This Web site, maintained by the United States Bankruptcy Courts, includes Official Bankruptcy Forms, Procedural Forms and the Bankruptcy Forms Manual. All forms and instructions are available in PDF format.

Chapter 13 Basics
This Web page provides general information about individual debt adjustment under Chapter 13 of the Bankruptcy Code.

Chapter 13 Practice Center