Filing a Chapter 13 Bankruptcy with a Royal Oak Michigan Lawyer

Certain debtors opt for Chapter 13 bankruptcy rather than Chapter 7 bankruptcy because it allows them to maintain their personal property even if they have missed monthly payments on their record. While Chapter 13 bankruptcy can reorganize your debt management plan, Chapter 7 bankruptcy, on the other hand, is a complete liquidation. In a Chapter 13 bankruptcy, the petitioner develops a repayment plan that, if granted, enables him to eliminate the debt at a greatly reduced cost and over a longer period. The bankruptcy court will determine the interest rate and payment period.  Choosing to get the services of reliable chapter 13 bankruptcy lawyers in Royal Oak is a wise move when considering bankruptcy. Our team of attorneys in our Royal Oak bankruptcy firm can help you with more information on the following:

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Overview of Chapter 13 bankruptcy

It is a kind of debt reorganization that enables you to repay just a portion of your total debt while dismissing the remainder. It is distinct from credit counseling and debt consolidation in that Chapter 13 requires creditors to participate and carries no tax returns. To be qualified for Chapter 13, you must have a consistent source of disposable income sufficient to support the costs of the repayment plan you propose.

When Should I File for Bankruptcy Under Chapter 13?

The following are the most prevalent reasons why people file bankruptcy under Chapter 13:

  • A person wants to avoid foreclosure and accomplish mortgage payments.
  • When a person defaults on a car loan debt or lease, the vehicle is at the risk of repossession.
  • A person possesses valuable nonexempt property that may be lost if they filed for bankruptcy under Chapter 7.
  • A person holds enough money to pay off most of his or her obligations, but he or she needs temporary debt relief from creditors.
  • In a Chapter 7 bankruptcy, a person has a non-dischargeable tax debt, school loan, or other debt problems.
  • A person is not qualified for the Chapter 7 bankruptcy discharge in Michigan.

 

How Does Bankruptcy Under Chapter 13 Work?

Creating a repayment plan is the most critical aspect of a Chapter 13 bankruptcy. The repayment plan will specify which creditors will be paid and the amount with which they will be paid. Any remaining disposable income by the month’s end must be used to pay unsecured debt, according to the payment plan (i.e. medical bills and credit card debt). A Chapter 13 plan should be authorized by the United States bankruptcy court before it can be implemented. The individual is no longer accountable for the balance of his or her dischargeable obligations if all parts of the debt-repayment plan are completed.

Difference Between Bankruptcy Chapters 7 and 13

One significant distinction is that your hardships are lowered in a Chapter 13 bankruptcy, while they are eliminated in a Chapter 7 bankruptcy. You may only file for bankruptcy Chapter 7 once every eight years, according to the bankruptcy filing period. Another distinction is that under a Chapter 7 bankruptcy, any cosigners or guarantors would not be entitled to the same bankruptcy protection as you, meaning that your creditors might still pursue them. In contrast, if your Chapter 13 repayment plan includes payment for any cosigned or guaranteed debt, you may be protected from creditors.

In Chapter 13, what Happens to Secured Debts?

The automatic stay precludes the collection of collateral in secured debt when filing Chapter 13 bankruptcy. A secured debt is frequently secured by a physical or tangible asset, such as a home or a car. Creditors are exposed to less risk since the asset will act as collateral if a borrower fails to pay. A mortgage is an excellent illustration of this: the creditor places a lien on the property until the loan is paid in full. If a debtor fails on a loan, the bank has the legal right to seize and sell personal property to rebuild its losses.

In Chapter 13, what Happens to Unsecured Debts?

You will be allowed to stop all sorts of collection activity about any unsecured debt as soon as you file for bankruptcy Chapter 13. Lenders have no security when it comes to unsecured debts. This implies that if a borrower defaults on a loan or misses any debt repayment, the lender’s sole legal option is to sue you to rebuild the money owed. Unsecured loans have higher interest rates than secured loans. Credit card bills and medical bills are two examples.

Frequently Asked Questions

My house is due for foreclosure, can I save it? 

With a Chapter 13 Bankruptcy, you can stop your mortgage company from foreclosing as long as you file before the sheriff’s sale date. You then repay the mortgage arrearage over the next several years rather than having to come up with a lump sum all at once.

My car is about to be repossessed, can I save it?

In a Chapter 13 case, you can stop the creditor from repossessing your vehicle or get the vehicle back from you. In some cases, competent bankruptcy lawyers can negotiate to lower the amount you owe on the vehicle so you can afford the payments.

What Is the Amount of My Chapter 13 Payment?

This fluctuates a lot based on your unique requirements. Generally, the debtor and his or her spouse must pay into the Chapter 13 payment plan all of their disposable income. The amount of disposable income is calculated by deducting the household’s reasonably necessary costs from the total revenue. We’ll create a thorough budget that we’ll present to the court and the Trustee.

What Is the Duration of Chapter 13?

A Chapter 13 case’s duration is determined by a variety of circumstances. The majority of the proposals will last between three to five years. If you’re over the median, you’ll usually have a five-year plan. If your income is below the median, a three-year plan may be suggested.

When Do I Have to Begin My Payments?

The first payment to the Chapter 13 Trustee must be made within 30 days of the case’s filing. The court will almost always compel us to put up a payment arrangement with your employer.

Get Financial Freedom With Our Trusted Bankruptcy Attorneys

Hammerschmidt Stickradt & Associates has assisted many individuals and families with all types of debt within Michigan, in securing their financial future. Our team of bankruptcy attorneys reviews each client’s bankruptcy cases basis to guarantee a successful conclusion. You are powerless to stop worrying at this point. Our Michigan bankruptcy lawyers are here to assist you in establishing financial freedom. Contact us now to schedule a free consultation.