What is a Chapter 13 Bankruptcy and Is It Right for Me? How it Works in Daytona, FL
Filing for bankruptcy relief is not something that most people assume will be in their future. However, even a small financial crisis can cause a person to miss one or two payments to their creditors. Once a person falls behind on mortgage payments, car loans, and credit card bills, it can be very difficult for that person to catch up, even after the financial crisis has passed. Fortunately, the Bankruptcy Code provides individuals and companies with a legal means of disposing of debt they cannot afford to pay.
Bankruptcy is not designed to strip away all your property and leave you with nothing. It is designed to give you a fresh start so that you can get back on your feet financially and begin to rebuild after a financial crisis. To learn more about filing bankruptcy in Florida, call (888) 316-2131 to request a free bankruptcy consultation with a Daytona bankruptcy attorney. Our bankruptcy law firm assists clients throughout Volusia County find an affordable solution to debt problems.
You can have debt relief and keep your property! We can tell you how during your free appointment.
Chapter 13 Bankruptcy Basics
There are several chapters of bankruptcy under the Bankruptcy Code available to individuals and businesses. Individuals, couples, and sole proprietors can file for debt relief under Chapter 13. A Chapter 13 bankruptcy case is also referred to as a “wage earner bankruptcy” because it allows a debtor to reorganize his or her debts through a bankruptcy plan.
When you file a Chapter 13 case, you must propose a repayment plan to the court. Your bankruptcy plan outlines how you intend to reorganize your unsecured debts into an affordable monthly payment. Some secured debts, such as car loans, may also be included in the monthly payment. A Chapter 13 plan takes between three to five years to complete. Once you complete your plan, the remaining balances owed on most, if not all, your unsecured debts are discharged. Creditors with discharged debts cannot take any action to collect the remaining balances on the accounts. Therefore, a Chapter 13 filing not only resolves your debt problems, but it also stops creditor harassment.
How Does a Chapter 13 Work in Florida?
When you file a Chapter 13 bankruptcy petition, the court assigns a case number and notifies your creditors that you have filed for bankruptcy relief. Your creditors must then work within the bankruptcy court to resolve the debt you owe to them. Creditors may not continue collection efforts or begin new collection actions without court approval. Therefore, filing a Chapter 13 petition stops repossessions, foreclosures, wage garnishments, collection lawsuits, and other forms of debt collection immediately.
As part of your bankruptcy filing, you must file a proposed Chapter 13 plan. Your bankruptcy plan provides the court and your creditors the details of how you intend to reorganize your debt. In most cases, your Chapter 13 plan payment will cover the payment for car loans, taxes, back child support, past due alimony, credit cards, medical debts, and other unsecured debts.
Mortgages on your home or other real estate are typically paid directly to the creditor outside of the bankruptcy plan. However, you may be able to eliminate the lien of a second mortgage if you meet the requirements for lien stripping, which we will discuss in further detail below.
The court must approve your plan; therefore, amendments may be necessary. Our Daytona bankruptcy attorney has extensive experience calculating bankruptcy plan payments. We propose the lowest plan payment allowable by law to help ensure you do not pay more than is required based on your financial situation.
Once your bankruptcy plan is confirmed, you continue paying your monthly plan payment to the Chapter 13 trustee until you complete the plan. The Chapter 13 trustee disburses the payments to creditors in accordance with the terms of your confirmed plan. In most cases, a Chapter 13 debtor pays a small fraction of the total unsecured debt through a repayment plan. Therefore, you could get rid of tens of thousands of dollars in credit card debt, personal loans, medical bills, and other debts for pennies on the dollar.
After all payments are received, the Chapter 13 trustee conducts a final review and submits an accounting to the court. The court then issues an Order of Discharge relieving your legal liability to repay any of the discharged debts. In other words, unsecured creditors who received only a small percentage of the money owed to them cannot take any action whatsoever to collect the remaining amount owed.
Benefits of Filing a Chapter 13 Bankruptcy in Daytona
During your free consultation with our Daytona bankruptcy attorney, you will learn the benefits and advantages of filing a Chapter 13 bankruptcy. Below are some of the advantages of Chapter 13 that may be of great benefit to you:
• Keep Your Home and Car — Filing a Chapter 13 case stops foreclosures and repossessions. In Chapter 13, debtors can keep their home and careven if they are behind on the payments and facing foreclosure or repossession.
• Restructure Car Loans — Through a Chapter 13 plan, you can lower the amount of your monthly payment on your car loan by stretching it out over 60 months. In addition, you may be able to lower the interest rate and even lower the amount of the loan that is considered secured debt.
• Lien Stripping and Cramdowns — In some cases, a debtor may be able to get rid of a second mortgage by paying a small percentage of the amount owed on the loan. Some debtors may also lower the amount of the secured lien on their car so that they pay less than is owed on the car to satisfy the lien.
• Avoid Contempt of Court for Support Payments — You cannot discharge alimony or child support. However, if you are behind in your domestic support payments, you can repay the past due portion through a Chapter 13 plan to avoid jail, provided you remain current on all future payments.
Contact a Volusia County Bankruptcy Lawyer for More Information
If you are considering a Chapter 13 bankruptcy filing or you have additional questions, you can discuss your situation with a Daytona bankruptcy attorney for free. For your free bankruptcy consultation, call (888) 316-2131 now or use the contact form on our website. We are ready to help you get out of debt and rebuild your credit through a bankruptcy filing.