At the Law Office of Timothy Brown, we are available to answer all of your questions about Chapter 13 bankruptcy. If you would like to talk to a Bankruptcy Attorney in the Cary, IL area, please contact us by email or give us a call at 815-788-9511 !
Here are some Frequently Asked Questions about Chapter 13 bankruptcy:
Q: Do you negotiate with the creditors to determine the amount they will receive in a Chapter 13 case?
A: No. This is a common misconception. The creditors are entitled to receive the amount designated in the court-approved Chapter 13 plan. Many variables effect the debtor's monthly payment amount as well as the amount each creditor is entitled to receive through the plan. Some of these variables include: the debtor's disposable income, the type of debts, the amount of the debtor's non-exempt assets, and the length of the Chapter 13 plan period.
Q: Can I keep any of my credit cards?
A: No. When a Chapter 13 case is filed, all debt must be included in the bankruptcy. In addition, the debtor is not allowed to obtain new credit during the pendency of the bankruptcy case unless the court grants permission.
Q: Do I have to pay all of my debt in a Chapter 13 bankruptcy case?
A: It depends. Certain types of debts must be paid at 100%, such as priority tax debt or arrears on secured debt. In addition, general unsecured must be paid at 100% if the debtor has sufficient disposable income or if the debtor has a certain amount of nonexempt property. But in cases where the debtor has minimal non-exempt assets and insufficient disposable income to pay 100% of the general unsecured debt, some of the general unsecured debt can often be discharged at the conclusion of the case.
Q: Is it hard to rebuild my credit at the conclusion of the case?
A: Usually not. The credit score can usually be elevated within a relatively short period of time after the case concludes. An experienced bankruptcy attorney can advise you how to rebuild your credit.
Q: How is the legal fee paid?
A: Many Chapter 13 bankruptcy attorneys will charge a portion of the legal fee at the beginning of the case and allow the debtor to pay the remainder of the fee through the Chapter 13 plan.
Q: What if I fail to make all of the Chapter 13 payments?
A: If the debtor fails to make all required payments, the case will likely be dismissed. However, if the debtor is unable to make the payments due to unexpected expenses or loss of income, the plan can sometimes be modified to allow the debtor to stay in the plan.
Q: I have heard that car loan debt can be reduced in a Chapter 13 bankruptcy. Is this true?
A: If certain requirements are met, a debtor can sometimes "cram down" the balance of their car loan to, in effect, make the loan balance equal to the car's value.