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“QUESTIONS, ANSWERS AND MISCONCEPTIONS”
CHAPTER 13 BANKRUPTCY
Chapter 13 Bankruptcy is a personal form of Bankruptcy that allows a person or married couple to enter into a Federally Court approved repayment Plan that will re-organize one’s debt obligations into a single monthly payment. This plan usually exists for a period of 36 to 60 months, with exceptions.
This reorganization of debt obligations, through your Chapter 13 Plan, may allow one to catch up on mortgage and car loan arrears, bring your federal and state tax, child support, and alimony obligations up-to-date, and eliminate unsecured debt for pennies on the dollar.
Unsecured debts include credit cards, personal loans, medical bills, past due rents, past due utilities, lines of credit and potentially second and additional junior mortgages. At the completion of your Plan, you will receive a Discharge from Bankruptcy and you will be current on your mortgage and auto loans, be caught up on any taxes, child support and alimony, and have no obligation to pay any additional unsecured debts.
Chapter 13 Bankruptcy offers tremendous and powerful benefits, which Include:
- You are allowed to Discharge most debt obligations.
- All foreclosure proceedings are immediately stopped.
- Any repossession attempts are immediately stopped.
- Both the Internal Revenue Service and State taxing authorities are immediately stopped in any and all collection efforts.
- You retain all your assets, including your home, vehicles, retirement accounts, and personal property.
- Creditors are immediately stopped from both continuously making harassing and threatening phone calls and sending collection mailings to you, your family and place of employment.
- All collection law suits are immediately stopped and, in the usual case, are dismissed from the legal system.
- All of your debt obligations are consolidated into a single monthly Plan payment, payable on a flexible payment schedule.
- Your Plan payment can conveniently be made either on-line on a date you choose, or on a set monthly automatic withdrawal. You can also make your payments by mail.
- The bankruptcy process is relatively anonymous. Specifically, the general public will not be aware of your circumstances.
- You can file a single case as a married couple (or as a single person – you choose), eliminating the need to file separate cases and reducing costs.
- A Chapter 13 Bankruptcy remains on your credit report for a briefer period of time when compared to Chapter 7 Bankruptcy.
- You can remove judgements and liens that have been placed on your home and forever eliminate them.
- There are no income tax consequences to filing for bankruptcy.
A careful analysis of one’s financial and asset status, along with the skillful preparation of a Bankruptcy case is required to assure that these benefits are maximized.
Ultimately, you can re-organize your debt obligations into a single payment which allows you to keep your home and assets, while eliminating debt obligations for pennies on the dollar, and granting you peace of mind and freedom from financial anxiety.
Common Chapter 13 Bankruptcy misconceptions and answers:
- It is untrue that you will lose all of your personal possessions and assets (such as your vehicle and home).
- It is untrue that you will never have a great credit score or be able to again obtain credit. Typically, credit cards, personal loans and vehicle loans can be quickly obtained. It takes approximately twenty four months to qualify for a mortgage.
- It is untrue that bankruptcy forever stays on your credit report. A Chapter 13 Bankruptcy case is completely removed from your credit report after eight years.
- It is untrue that you can only file for Chapter 13 Bankruptcy once. If overwhelming circumstances again present themselves in your life, one can qualify to again file additional bankruptcy cases with the same benefits.
- It is untrue that you cannot file a Chapter 13 Bankruptcy if you previously filed either a Chapter 7 or Chapter 13 case.
- It is untrue that everyone will know that you filed for bankruptcy. A bankruptcy filing is not listed in the local paper and is not publically announced. Only your creditors and court personnel will be aware of your filing for bankruptcy.
- It is untrue that you will have to lose all of your bank account and retirement savings.
- It is untrue that debt consolidation is a better option. In most cases, debt consolidation costs more, lasts longer and has income tax consequences.
- It is untrue that you will automatically lose your tax refund.
As such, you can truly move forward in life in a new, peaceful and successful direction while swiftly obtaining your financial goals.
You can take action now!
Documents that you can easily gather which are necessary to prepare a case:
- If applicable, a date-stamped copy to the Deed to your home, along with a date-stamped copy of your Homestead Declaration. If you do not have a copy, you can obtain one from either the Registry of Deeds or, if your land is registered land, from the Land Court.
- A copy of your most recent federal tax return. If you do not have one, we can order a tax transcript for you.
- A copy of your credit report. If you do not have one, we can order one for you.
- A copy of any judicial liens and judgments entered against you.
- Either your recent paystubs, or evidence of other income (for example, social security, disability, pension, self-employment income, etc….).
- A copy of your most recent bank statement(s).
- We will obtain valuations for your home and vehicles.
Useful website links to get you started.
- United States Bankruptcy Court for Massachusetts:
- New Bedford Registry of Deeds
- Fall River Registry of Deeds
- Taunton Registry of Deeds
- Somerset Registry of Deeds
- Attleboro Registry of Deeds
- To search for your local Registry of Deeds
- To Search the Land Court