Chapter 13 Bankruptcy is also known as Personal Reorganization Bankruptcy. It is the type of Bankruptcy where you pay back your creditors the amount that your budget will allow, usually interest-free.
Basically, the process starts with you providing me certain records such as
- The past 2 years of filed federal and state tax returns;
- All of the paychecks records that you received during the most recent 6 calendar months from the month of filing. These records must contain the gross amount of your checks and the itemized deductions for health insurance, taxes, etc. (for example, if you are filing in July, I would need all records from January through June);
- All bank statements of any accounts that are in your name or your name are affiliated with for the past 6 months
- All car titles in which your name is associated with
- A current credit report (these can be obtained from various websites for free or a nominal charge. I can access all 3 bureaus for you for a charge of $35.00)
- A list of all property you own. This includes furniture, jewelry, guns, vehicles, etc.
- A bankruptcy education certificate. This can be obtained from numerous websites for a small fee. The classes usually take less than an hour and cost around $25.00. I recommend www.debtorwise.org.
That seems like a lot of stuff and it is. The good news is that once you provide these to me the hard part is over. I use these documents to prepare your bankruptcy forms and once I’m finished you sign and voila! no more creditor harassment.
That’s because once you sign and I file your case forms the “automatic stay” kicks in. The automatic stay is just a ‘legaleze’ word for protection. For a more complete list of bankruptcy terms, see our glossary.
You and your assets are now protected. You will need to complete one more online class and this can be taken after your case is filed from the same website you obtained your 1st class certificate from. This class usually takes less than an hour too and costs around $15.00.
The only other thing that you will have to do is attend a brief hearing called a 341 hearing or a “meeting of creditors” hearing. This is an informal meeting giving your creditors the opportunity to question you about their debts. So, usually what happens at this meeting is the Trustee will ask you a few simple questions concerning the accuracy of your paperwork and you are done with the questioning in less than 5 minutes. Easy huh?
So what kinds of debts are dischargeable? Click here.
So do I get to keep all my property? Click here for a list of all Oklahoma Exemptions.
What’s the difference between Chapter 7 and Chapter 13?
There are a number of key differences between Chapter 7 and Chapter 13 Bankruptcy. The biggest difference is the time involved. Chapter 7 is over usually within 4 months of filing.
Chapter 7 is also known as a “liquidation” bankruptcy. That is, the Trustee examines all of your property listed on the bankruptcy petition. In Oklahoma, most everything that the average household owns is exempt. For a list of the exempt property click here. Since, most likely, everything you own is exempt, you will keep everything and the creditors will end up getting $0.00. In other words, all of your property is liquidated.
If you did happen to have a property that is not exempt, that property goes to your estate and is distributed to your creditors by the Trustee. This situation does come into play on occasion.
Let’s say that you are due a tax refund. If you were to file bankruptcy before you received that refund, you would have to turn over the portion of those funds to the Trustee that was not exempt, namely, Earned Income Credit and/or the percentage of the refund that was accrued by the income you received after the filing of your case.
Be sure to ask your attorney about this if you regularly receive a refund or you are expecting one for the year you are filing. Make sure you discuss with me if you file your taxes between January 1st and the time you file taxes as you stand to lose all of your refunds if you receive that refund before the filing of your case.
A Chapter 13 Bankruptcy is sort of like a debt consolidation but with some key differences. In regular debt consolidation, your creditors usually are under no obligation to play ball with you or your debt consolidation company. Even though you are making regular payments, the payments aren’t usually going to any particular creditor at any given time.
Therefore, they can and often do still pursue collection efforts up to and including filing a lawsuit against you. Being in a debt consolidation plan is no defense to such a lawsuit. However, under Chapter 13, the creditors have no option but to accept whatever the Bankruptcy Court determines your ability to pay back is.
To determine this amount, the Court looks at your income and qualified expenses and out comes a number. That number is what you pay back each month for a period of 36 to 60 months (length determined, among other things, by your income and expenses). You might be paying back 0% or 100%. I can give you a quick and free estimate on your payment plan.
So, you might ask, why would I ever want to file a Chapter 13 instead of Chapter 7? The answer to that might be – you have no choice. If you make too much money as determined by the means test or have filed a previous Chapter 7 in the past 8 years this is your only option.
Also, in some circumstances, Chapter 13 is your best option. If you are behind on mortgage payments, car payments, taxes, among others, this option will enable you to pay back the amount that you are behind, often interest-free. All the while being under total protection from things like harassing phone calls, lawsuits, foreclosures, repossessions, etc.
My firm handles cases throughout the Oklahoma City Metro Area as well as Western and Southwest Oklahoma. We can assist you with this difficult decision. Please call my office today for a free bankruptcy consultation, either in my office or by telephone – (405) 255-2380. You may also email me anytime EMAIL ME!