Also known as a wage earner’s plan, a Chapter 13 bankruptcy allows individuals and couples with a regular income to reorganize their debts. Chapter 13 debtors propose a plan to repay all or a portion of their debts through monthly payments to a Chapter 13 trustee. The maximum length of a Chapter 13 plan is five years; however, if the debtor’s monthly income is below the state median income, the plan will be 36 months unless the court approves a longer term. In either case, a Chapter 13 bankruptcy gives the debtor relief from debt and prevents creditors from beginning or continuing collection efforts.
Advantages of a Chapter 13 Bankruptcy
Many people view filing bankruptcy as a negative process; however, there are many advantages of filing a Chapter 13 case. For example, debtors have the ability to save their homes from foreclosure by filing a Chapter 13 bankruptcy. Debtors can repay the past due mortgage payments through their bankruptcy plan and resume normal mortgage payments outside of the plan to save their home.
Another advantage is restructuring some secured debts. While debtors may not restructure a mortgage, they may be able to lower the interest rate and the monthly payments on a car loan and stretch out the payments over the life of the Chapter 13 plan. Unsecured debts receive a percentage of what they are owed based on several factors. Any remaining balance owed to unsecured creditors is discharged at the completion of the Chapter 13 plan provided that the debt is eligible for a bankruptcy discharge.
How do I file a Chapter 13 Bankruptcy?
The Chapter 13 case begins with the filing of a petition and schedules that provides the court, trustee and other interested parties information about the debtor including but not limited to income, expenses, assets, debts and financial history. A proposed Chapter 13 plan is also filed and served on all creditors and interested parties. Creditors, the trustee and other interested parties have a specific deadline to object to the terms of the plan. During this time, the debtor’s First Meeting of Creditors is usually held. The debtor will answer questions by the trustee under oath.
If a party objects to the proposed plan, your attorney will work with that party to settle the objection or prepare for hearing to allow the judge to make a financial decision. Most objections are settled without a court hearing. The debtor makes monthly payments to a Chapter 13 trustee who distributes those payments according to the confirmed Chapter 13 plan. When all payments have been made, the court will enter an order of discharge and order closing the case.
There are other rules and obligations that the debtor must meet that your attorney will discuss with you prior to filing and as the case proceeds. Our attorneys and legal staff are committed to helping our clients be successful in their Chapter 13 bankruptcy case so that they can protect their assets, reorganize their debts and obtain a discharge at the end of the case.
Contact Our Office for a Consultation with an Experienced Illinois Bankruptcy Attorney
The Chapter 13 bankruptcy attorneys of Pioletti Pioletti & Nichols represent individuals who need experienced bankruptcy attorneys. We serve clients throughout McLean, Woodford, Tazewell and Peoria counties by providing compassionate, competent legal services. We offer free consultations. You can contact our office by calling 309-938-4838.
When you need the assistance of an experienced bankruptcy attorney in Central Illinois, call the compassionate and skilled attorneys of Pioletti Pioletti & Nichols. We are dedicated to providing our clients with exceptional service and support throughout the bankruptcy process.