Bankruptcy Lawyers Help Utahns Negotiate Chapter 13
Helping you make the most of this chance to get your finances reorganized
Unlike a Chapter 7 bankruptcy, Chapter 13 is less of a liquidation of debt and more of a readjustment of your obligations. You are more likely to be able to keep your home, but you are not initially released from your obligations to creditors. Our legal team at Huntsman | Lofgran help you determine if you qualify for a Chapter 13 bankruptcy and if you do, guides you through the bankruptcy process until the completion of your repayment plan in the next three to five years.
Most debts cannot be erased through Chapter 13 bankruptcy
In Chapter 7 bankruptcy, much of your debt is written off. With Chapter 13, it is all about taking on all your debt head-on. Debts for which you remain obligated include:
The good news is that some of these debts may be renegotiated or rescheduled. Essentially, your bankruptcy trustee and creditors work with you to formulate a debt repayment plan that, while ambitious, encourages you to pay down your debt over a three- to five-year period. For your part, you must commit all your disposable income to repaying the debt. When you complete the plan, you may still be liable for some debt. Your original mortgage terms may be reinstated, for example, but you emerge on sound financial footing.
A source of income, bankruptcy courses and credit counseling are required
The process of bankruptcy under Chapter 13 mirrors that of Chapter 7. You apply a means test to your income for the prior six months to determine if you are eligible for either one. You are required to enroll in both debtor education and credit counseling classes.
However, unlike Chapter 7, a Chapter 13 filing requires you attend a creditors meeting, which is conducted by your trustee. You may be asked to articulate the steps that have brought you to bankruptcy, detail all your debts (any omissions can be used against you later), and respond to other questions by creditors.
Advantages and disadvantages of Chapter 13 bankruptcy
Chapter 13 bankruptcy is best for those who are in deep debt, but who still have income and do not want to give up certain assets, such as their home, car or business, particularly when they have more equity in those assets than they can protect with their Utah homestead bankruptcy exemptions. Chapter 13 can help stave off foreclosure, and even get you out from under back taxes and stop interest from accruing on that tax debt, whether it’s local, state or federal.
Some of the advantages of a Chapter 13 bankruptcy include:
- If you can see the repayment plan through, you are likely going to keep all your property.
- Debts may be negotiable.
- As with Chapter 7, creditors’ collection efforts and wage garnishment cease upon the court’s approval of your filing.
- If your plan provides for the full payment, cosigners on your debt are immune from creditors’ collection efforts.
- You can separate your creditors by class, enabling you to treat cosigned debts differently from debts you incurred on your own.
- A Chapter 13 filing can be made four years after a Chapter 7 filing, or two years after a Chapter 13 filing.
The disadvantages of a Chapter 13 bankruptcy include:
- Your disposable income is spoken for over the next several years.
- Your debt cannot exceed $1 million.
- Costs are higher since a Chapter 13 filing is more complex and a trustee is administering a multiyear program on your behalf.
- Filing for Chapter 13 can make it more difficult for you to obtain future credit, rent or find a job, though perhaps not as difficult as after filing a Chapter 7.
Retain a Salt Lake City lawyer who knows what can be negotiated in Chapter 13
At Huntsman | Lofgran in Salt Lake City, our bankruptcy attorneys know what’s negotiable in a Chapter 13 filing and what’s not. Consequently, we can help you make the best of this opportunity. To land on your financial feet sooner than you might think possible, call us at 801.838.8900 or contact us online today.