Chapter 13 is one of the many chapters under the Bankruptcy Code. It is also known as the wage earner’s plan. If you file a Chapter 13 bankruptcy petition, you must submit a payment plan to the court and make the payments under the plan. Chapter 13 bankruptcy allows the debtor to repay the creditors in installments. Homeowners facing foreclosure can file a Chapter 13 petition and include the mortgage in the payment plan if they want to retain their homes. Most individual debtors file for bankruptcy petition under Chapter 7 but debtors with a regular source of income should opt for filing under Chapter 13. In a Chapter 7 bankruptcy proceeding, the bankruptcy trustee liquidates your non-exempt assets to repay your debts. A Chapter 13 proceeding allows you to retain all your assets as long as you stick to your payment plan.
Debtors based in Tampa should contact an experienced St. Petersburg bankruptcy lawyer if they are considering bankruptcy as an option. By accessing the services of an experienced St. Petersburg bankruptcy lawyer, you can successfully get a bankruptcy discharge. There are a lot of attorneys in Florida but you should contact a bankruptcy attorney located in Tampa Bay or Pinellas County.
The rules and procedure for a Chapter 13 bankruptcy is complex. If you fail to abide by the rules and procedure, your hopes of getting a discharge will disappear and your petition will be dismissed. An experienced St. Petersburg bankruptcy lawyer will provide the debtors who contact him or her seeking assistance for bankruptcy filing with a questionnaire. The attorney will use the answers provided by the debtor to draft the Chapter 13 bankruptcy petition and will file it in the bankruptcy court. The attorney will also use the answers to prepare the schedules that must accompany a Chapter 13 petition including the details of assets, liabilities, income, expenditure, etc. Once a person files a Chapter 13 bankruptcy petition, the law prohibits the creditors from taking steps to recover the dues. In effect it stays all actions against the debtor. The creditors cannot even contact the debtor.
Payment Plan
Along with the Chapter 13 bankruptcy petition, the debtor must also submit a payment. The debtor can file the payment plan within 15 days from the date of filing. An experienced St. Petersburg bankruptcy lawyer can assist debtors prepare a payment plan based on their available resources. The debtor must make regular contributions every month towards the payment plan. Generally the payment plans provide for payment of the debts within three years. However in some cases, the bankruptcy court will approve payment plans that provide for payments within five years. The debtor must make the contributions directly to the bankruptcy trustee who will then distribute the payments to the creditors. The debtor must start making the contributions within 30 days from the date of filing of the payment plan.
At the creditors meeting, the creditors can object to the payment plan. Having an experienced St. Petersburg bankruptcy lawyer draft your payment plan will ensure that your payment plan does not receive any objections. Even if a creditor objects to the plan, your attorney will deal with the objections and convince the bankruptcy court to approve your payment plan.
Cram Down Provision
One advantage of filing under Chapter 13 in Florida is the cram down provision. An experienced St. Petersburg bankruptcy lawyer can assist debtors take advantage of this provision and legally lower the outstanding on a secured loan.
In a Chapter 13 bankruptcy proceeding, the debtor gets to retain all assets unlike in a Chapter 7 bankruptcy proceeding where a court appointed trustee takes over all non-exempt assets and liquidates them to pay off the debts. In Chapter 13 proceedings the debtor can retain the collateral so long as the payment plan provides for repayment of the loan or the collateral’s market value.
Using the cram down provision of a Chapter 13 bankruptcy, you can lower or strip a second mortgage or lower the mortgage on rental and investment properties. When you cram down a mortgage, the part of the mortgage which is equal to the current market value of the collateral will be considered as secured and must be repaid in full. The other part will be considered as unsecured and an experienced St. Petersburg bankruptcy lawyer can negotiate with the lender and you will be able to discharge the unsecured part of the mortgage by paying pennies for the dollar. The cram down provision cannot be used to lower the mortgage on your principal residence. However there are cases where the courts have permitted debtors to cram down the mortgage on their principal residence when there is additional collateral.