Chapter 13 Bankruptcy Lawyers in Jacksonville

Help with Chapter 13 Bankruptcy

Affordable Bankruptcy Debt Relief in Northeast Florida

Chapter 13 bankruptcy, also called a wage earners plan, is for individuals who have regular income. It involves establishing a plan to repay all or part of your debts by paying creditors in installments over a three– to five-year period.

There are several advantages to filing under Chapter 13, rather than Chapter 7.

Stop foreclosure on your home

Chapter 13 is an effective approach if you are serious about keeping your home. It allows you to stop a foreclosure and provides you with up to five years to make up the past due payments while—at the same time—staying current on payments going forward.

The bankruptcy court appoints a trustee to manage the debtor's funds according to the Chapter 13 plan filed by the debtor. The bankruptcy court normally will enter an order permitting the Chapter 13 trustee to make regular and extra monthly mortgage payments from the funds the debtor agrees to pay to the trustee per the Chapter 13 Plan.

In Chapter 7, the bankruptcy court cannot generally impose a requirement on the mortgage company to let the debtor pay his mortgage in any particular fashion, other than as called for by the original note and mortgage. So if keeping your home is a priority, and you have a regular income, Chapter 13 is generally a better option.

Prevent repossession of your car

In a Chapter 13 bankruptcy, a debtor who is behind on automobile payments can often prevent repossession and keep the car by continuing to make regular payments.

The debtor may be able to reduce the amount he or she has to pay the lender if the debtor has owned the vehicle for more than 910 days. In that case, the lender will have a secured claim only for the lowest value of either the vehicle or the debt. Say a vehicle is worth $3,000 and the net pay-off on the debt—as of the date of the filing of the Chapter 13 petition—is $5,000. The lender will have a secured claim for $3,000 and an unsecured claim for $2,000. The secured claim can be paid out over the life of the Chapter 13 Plan. This amount is often lower than the monthly payment called for by the contract.

This same treatment is available for motorcycles, boats, furniture, and in some instances, even manufactured homes. In many cases, the interest rate may also be reduced.

Discharge old income tax debt

Certain income taxes, if they are old enough, are eligible for bankruptcy discharge. In this instance, the tax, the penalty, and the interest all are discharged and the IRS is stopped forever from trying to collect it.

There are very specific time tests involved, however. Our experienced bankruptcy attorneys can help determine what income tax debts might be eligible for discharge. If taxes are not old enough for discharge, the taxes may still be paid out over the life of the Chapter 13 plan. If the IRS has not filed a tax lien in the public records, or if filed, if there are no assets for the lien to attach to, and if the taxes are not old enough for discharge, the taxes will be treated as priority claims in Chapter 13. That may mean no interest or penalties will accrue after the Chapter 13 case is filed.

Divorce-related debts

Chapter 13 may also provide relief from divorce-related debts not available in Chapter 7.

Another advantage to filing Chapter 13 rather than Chapter 7 is the ability to buy back non-exempt assets. In a Chapter 7 case, the trustee will only allow the debtor a period of 3 to 12 months to accomplish the buy back. However, in Chapter 13, the debtor will normally by permitted to retain the assets and pay enough money into the Chapter 13 Plan each month to make sure that the unsecured creditors receive at least as much as they would have received if the case had been filed under Chapter 7, significantly reducing the amount of the monthly payment required.

The Bankruptcy Law Firm of Lansing J. Roy, P.A., represents clients filing for Chapter 13 bankruptcy who live in the Middle District of Florida, Jacksonville Division. We have the skill and experience to assess your individual financial situation, examine all of your options and help you take control of your financial life.

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For additional information on Chapter 13 bankruptcy and answers to frequently asked questions, click here.