Portage Chapter 13 Bankruptcy Lawyer
Many people considering bankruptcy have valuable property that they do not want to lose. If they file for a Chapter 7 bankruptcy, then they can quickly wipe out debts, but at a price—the trustee can take their non-exempt property and use it to pay off creditors.
This is where a Chapter 13 bankruptcy comes in. Called a “wage earners” bankruptcy, it allows you to make regular payments on a payment plan and not lose any property as a result. At the end of the payment period, any remaining debts will be wiped out.
Who Qualifies for a Chapter 13?
Only people with a regular source of income can apply for a Chapter 13 bankruptcy. You also cannot have too much debt:
- Unsecured debt cannot exceed $394,725
- Secured debt cannot exceed $1,184,200
Many Indiana debtors consider a Chapter 13 if their income is too high to qualify for a Chapter 7, but many of our clients choose Chapter 13 even if they were eligible for a Chapter 7. Often, they want to save their home. Indiana’s homestead exemption will only protect $17,600 in equity in a home (double if married). If you have much more equity than that, you can lose your house by filing Chapter 7, but Chapter 13 will allow you to keep it.
What is the Payment Plan?
The centerpiece of a Chapter 13 bankruptcy is the payment plan. It will last three to five years, depending on your income, and during this time you contribute your disposable income to your creditors.
To calculate your disposable income, you subtract necessary expenses from how much you make each month. Necessary expenses include things like:
- Rent or mortgage
- Transportation costs
These expenses must be reasonable. In fact, the bankruptcy rules permit you to deduct only so much. For example, you cannot eat caviar every night and deduct the entire cost. Instead, there is a maximum you can deduct.
Your disposable income is what is left over after deducting reasonable expenses from your income. Each month, an Indiana debtor will pay this money to his or her creditors by cutting a check to the bankruptcy trustee, who will disburse the money.
At the end of the repayment period, some creditors will be fully paid, but some will not. You can often wipe out any unpaid amounts at the end of the payment plan if the debts qualify.
What are the Advantages of a Chapter 13 Bankruptcy?
The primary benefit is that you will not lose non-exempt property. Our clients in Indiana have also realized other benefits, including:
- You can stop a foreclosure by filing for bankruptcy and catch up on your unpaid mortgage payments by including them in your payment plan.
- You can stop wage garnishment of child support or spousal support and pay your arrearages by including them in your payment plan.
- You can include your attorneys’ fees in the payment plan, making bankruptcy more affordable.
Contact a Portage Chapter 13 Bankruptcy Attorney
To find out whether you would benefit from filing for Chapter 13 protection, please reach out to us today. The Law Office of Kevin M. Schmidt has helped many Indiana clients get some breathing room by reorganizing their debts. Contact us today to schedule a free consultation.