Chapter 13

Who May File a Chapter 13 Bankruptcy?

The Law Offices of W. George Senft specializes in Chapter 13 Bankruptcy Law in Portland, OR. Individuals with regular income may file a Chapter 13 Bankruptcy. The debtor repays all or part of his debts over 3 to 5 years pursuant to a court-approved payment plan.

Should I File A Chapter 13 or Chapter 7 Bankruptcy?

Chapter 13 Bankruptcy is filed in the following circumstances:

  • To stop a foreclosure
  • To erase a second or third mortgage
  • You do not qualify for a Chapter 7 Bankruptcy.
  • In order to protect assets
  • To stop the repossession of a car
  • Paying outstanding tax liabilities

Chapter 13 Bankruptcy and Income Taxes

Income taxes can be discharged in a bankruptcy depending on a variety of criteria – when the taxes became due, the tax returns were filed, and when the taxes were assessed. Taxes that cannot be discharged (erased) in a bankruptcy can be paid in a Chapter 13 bankruptcy. In a Chapter 13 plan, you pay the amount you owe at the date of the filing your Chapter 13 bankruptcy petition.

Chapter 13 Bankruptcy and Foreclosures

The filing of a Chapter 13 Bankruptcy will immediately stop a foreclosure proceeding. This is the protection of the automatic stay. There are exceptions to this rule if you have previously filed a bankruptcy. A Chapter 13 Bankruptcy will save your home because you have up to five years to catch up with your mortgage arrears. While you are in bankruptcy you need to make your regular mortgage payments. A Chapter 13 Bankruptcy does not modify your loan.

Chapter 13 Bankruptcy and Second Mortgages

A Chapter 13 Bankruptcy will not modify your mortgage payments. The process of lien stripping will remove the second mortgage if it is unsecured. Junior mortgages are wholly unsecured if the value of your home is less than the payoff balance of your first mortgage.

Chapter 13 Bankruptcy and Car Loans

A Chapter 13 Bankruptcy avoids the repossession of your vehicle if you have fallen behind on your car loan payments. High-interest rates of car loans will be lowered to a more reasonable rate of 4% to 6%. The balance of your car loan will be reduced to the fair market value of your car. Particularly if you have purchased the vehicle more than 910 days before the filing of your Chapter 13 petition.

The Process of a Chapter 13 Bankruptcy

Filing the Chapter 13 Petition with the Bankruptcy Court, creditor actions will cease immediately. You and your attorney will attend the Meeting of Creditors conducted by the Chapter 13 Trustee. The Trustee will ask you questions regarding your financial affairs. Creditors have the right to be present and ask questions.

45 days after the Meeting of Creditors, the Confirmation Hearing is held; the Judge will approve the Chapter 13 plan detailing what debts will be paid. After the confirmation of your plan, the Trustee will start dispersing the funds to your creditors. Bankruptcy will remain for 3 to 5 years before receiving a discharge.

Credit Counseling and Debtor Education

Section 109 of the Bankruptcy Code makes it mandatory to participate in credit counseling. Credit counseling can be done online or by telephone.

After your case is filed, you have to take the Debtor Education course. Online or by telephone. This is necessary to receive the discharge.