What Is Chapter 13 Bankruptcy?

Chapter 13, also known as the “wage earner’s plan,” is a form of consumer debt reorganization that allows debtors to restructure payments by combining many debts into a “plan.” Debtors then make one monthly payment for all of the debts included in the plan to the Chapter 13 trustee.

Not all debts, however, follow this rule. Mortgage payments, for example, will often need to be made directly to the creditor “outside” of the plan. However, if there are mortgage arrears, those will be included in the plan, as long as future payments due under the loan are provided for in the plan as well.

In most Chapter 13 cases, debtors get to keep their property while making payments to the trustee out of a debtor’s future income. These payments must pay all or a portion of the debt over the life of the plan.

You should consult a bankruptcy attorney with experience handling Chapter 13 cases before deciding if this avenue is right for you. Contact us at the office of Debra Booher & Associates now to get answers to your questions.

When Is Filing Chapter 13 Bankruptcy Appropriate?

Chapter 13 bankruptcy may be appropriate if you have:

• Fallen behind on a secured loan for a home, vehicle or other piece of property and are facing the possibility of repossession or foreclosure,
• Nonexempt property that is eligible for protection under Chapter 7 bankruptcy
• Enough disposable income to pay back a major portion of your debt over the course of time

There are a lot of factors that determine qualification for Chapter 13 as well as whether or not a debtor should pursue a bankruptcy petition.

What Happens To Your Property?

Even though a debtor going through Chapter 13 gets to keep his or her property, exempt property is still used to determine if a repayment plan complies with the Bankruptcy Code.

If you file Chapter 13 repayment, you should know that creditors are entitled to, by law, at least as much under your repayment plan as they would receive from Chapter 7 liquidation. Whatever you would have received through Chapter 7 liquidation needs to at least match your payments under a Chapter 13 plan in order to comply with the Bankruptcy Code.

Frequently Asked Questions On Chapter 13

Filing for Chapter 13 bankruptcy in Ohio can help restructure your debts and protect your assets. These answers should help you understand Chapter 13 better:

What happens if I miss a payment under my Chapter 13 plan?

Timely payments are crucial under a Chapter 13 bankruptcy plan:

• If you miss a payment under a Chapter 13 plan, the bankruptcy trustee can file a motion to dismiss your case.
• In some cases, the court may allow a plan modification to catch up on missed payments rather than dismissing the case immediately.
• Repeated missed payments can risk your home or car if those debts are part of the plan and arrears are not addressed.

It is important to contact your bankruptcy attorney immediately if you anticipate missing a payment. A lawyer can help negotiate alternatives or request court approval to prevent plan failure and protect your assets.

How does filing for Chapter 13 bankruptcy affect my credit score?

A Chapter 13 bankruptcy will negatively impact your credit score, and it will appear on your credit record for seven years from the date of filing.

However, it is important to note that the negative impact on credit can vary greatly depending on your circumstances. Those who were already struggling with damaged credit often find that the drop in their score is minimal. Although it can initially be challenging to obtain new credit, adherence to the repayment schedule and strategic, measured use of secured credit and new credit can allow you to quickly build a more positive score.

We can provide guidance on strategies to minimize credit impact and maximize the benefits of successfully completing your repayment plan.

Can I sell property or refinance my mortgage during an Ohio Chapter 13 bankruptcy?

Selling property or refinancing a mortgage is possible but requires court approval. If you are:

• Selling property: You may need trustee approval, especially for significant assets, to make sure creditors’ interests are protected.
• Refinancing a mortgage: Lenders must comply with bankruptcy rules, and the court may need to authorize the transaction.

Any proceeds from sales or loans may affect your monthly payments or plan modifications. Working with a bankruptcy attorney helps ensure compliance with Ohio laws, protects your property rights and avoids complications that could jeopardize your Chapter 13 plan.

Contact Our Chapter 13 Lawyers Now

The time to take control of your debt is now and the skilled bankruptcy attorneys at Debra Booher & Associates can help. We are one of the leading consumer bankruptcy law firms in northeastern Ohio, filing more than 2,000 bankruptcy cases per year for clients throughout the region.

Call 888-542-1300 or contact us online to speak with an experienced consumer bankruptcy lawyer today.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.