Navigating Debt Consolidation Vs. Chapter 13 Bankruptcy

This article unpacks:

• The role creditors have in approving a chapter 13 plan.
• Co-signers’ responsibility when someone enters into chapter 13 bankruptcy.
• How entering into chapter 13 bankruptcy affects lawsuits held against you.

How Much Of A Debtor’s Income Must Be Paid To The Chapter 13 Trustee Under A Chapter 13 Bankruptcy Plan?

There’s no specific number. Since the amount a debtor must pay to the chapter 13 trustee is based on their income and expenses, there is no amount we can give since it varies from person to person. For example, if someone has an extra $1,200 a month, their payment will be higher than someone with only an additional $50 a month.

When Do The Payments In A Chapter 13 Bankruptcy Begin? How Often Are They Made?

The payments begin about a month after you file and are paid monthly.

Is It Necessary For All Creditors To Approve A Chapter 13 Bankruptcy Plan Before It Takes Effect?

Technically, creditors have an opportunity to object to a plan. If they do not object, that’s considered their approval. So they do not have to explicitly say they approve the plan necessarily. If they do object, you have a hearing over the issue that they can either win or lose. So in this sense, they have some say in the plan’s shape.

How Are Debts That May Have Been Co-Signed Or Guaranteed By Someone Else Handled In A Chapter 13 Bankruptcy?

Debt associated with a chapter 13 bankruptcy is like any other debt – you are only responsible for what you are responsible for.

If you have a cosigner, they will be notified that you are in bankruptcy, but this does not affect the case in any other way most of the time. They cannot force you to do anything. There are no unique or different responsibilities for a cosigner in chapter 7 or 13 bankruptcy other than those outlined when they co-signed.

Do Married Couples Have To File For Bankruptcy Together? Could They File Separately? Which Is Better?

Married couples are not required to file for bankruptcy together. You can file without your spouse. If you do, you will likely be asked why your spouse is not filing.

In most instances of couples filing for bankruptcy separately, they do not share the debt. If this is the case, it is not a significant issue. However, when they do share debt, it is strange that one party would not file with the other. The reason why is that they would still owe the debt unless they file together.

In general, we advise clients to file a joint bankruptcy. We do not charge any more to do so, and it makes the filing spouse’s life much easier.

How Do Courts View Debt Of Married Couples? Are All Debts Incurred After Marriage Shared?

In Florida, debt is determined by the name of the person the item is in, even after marriage. So, for example, if your name is the only one on the car, it is legally only your debt.

Can A Self-Employed Person File A Chapter 13 Bankruptcy?

A self-employed person can file for chapter 13 bankruptcy. If you file chapter 13 and are self-employed, the issue will be predicting your income. When you are self-employed, the hardest thing to do is predict your monthly income. You may have a pattern, but you never know how exactly it will work out. Being in a chapter 13 plan with that pattern will make things considerably stressful, but it is possible legally to do.

Does Filing For Chapter 13 Bankruptcy Affect Any Lawsuits Held Against Me?

When you file for bankruptcy, any lawsuit held against you will pause, and as long as you get your bankruptcy discharge, it will go away. If there’s a judgment, then some additional steps would have to be done that are not part of your bankruptcy. You will have to pay to get a motion filed to remove the judgment if you own something.

So, for instance, suppose you are a homeowner with a judgment against you. Even if you file bankruptcy and discharge the debt, you have not discharged the lien. Thus, you have to file a motion to remove the lien. This extra step makes things a little more complicated, but other than that, bankruptcy takes care of many things.

Will I Have To Appear In Court In A Chapter 13 Bankruptcy Case?

You do not necessarily have to go to court for a chapter 13 bankruptcy case. However, if there is something your creditors challenge, if a trustee wants something, or if there are disagreements over the payment plan, you would have to go to court.

The important thing to keep in mind is that the chance of going to court for a chapter 13 bankruptcy case is about the same as a chapter 7 bankruptcy case – decently low.

Do Courts Ever Reject A Debtor’s Chapter 13 Plan?

If the payment does not satisfy specific criteria that must be satisfied, the court will likely reject the plan. For example, if you suggest making payments to catch up on your mortgage, but your payments will not actually achieve that, you might get an objection.

Likewise, if your plan does not consider an asset that you cannot or did not protect, the court will not think you are paying what you should based on your income and expenses. They can and do object for this reason as well.

Lastly, and most obviously, if a creditor objects to your plan and they win the objection, your plan must be altered.

What Would Happen If I Took On New Debt While In Chapter 13?

Debtors are not supposed to take on new debt without permission. If you need to take on new debt, you are supposed to request permission from the trustee. If you take on new debt without this permission, it is best to be able to handle it without bringing it to the court.

What Is The Role Of My Attorney In A Chapter 13 Bankruptcy Case?

Attorneys with our firm get your case filed in a way you can afford. Next, we monitor what the creditors and trustees file and ensure there are no issues or things to object to. We also update the court with your tax returns every year.

If something changes in your life, we make appropriate requests to the trustee to see if the changes can change your case at all. If something pertaining to your case is challenged, we go to court and represent you.

In short, we are tied to your case for the three to five years it will take. Anything that happens within that time period becomes our responsibility.

For more information on Debt Consolidation Vs. Chapter 13 Bankruptcy, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (407) 305-5599 today.