Find out if you can qualify for
an Everett Bankruptcy
Snohomish County Bankruptcy Attorney David M. Lux
CALL (425) 249-7156Chapter 13 Bankruptcy:
Pay Only What You Can Afford
There are many reasons people file for Chapter 13 Bankruptcy instead of Chapter 7 Bankruptcy. In many financial circumstances, it is in one's best financial interest to file a Chapter 13 Bankruptcy petition even if you qualify for a full discharge of your unsecured debts under Chapter 7 Bankruptcy.
In contrast to Chapter 7 Bankruptcy, Chapter 13 Bankruptcy requires a Chapter 13 Plan. This plan is a payment plan to repay at least a portion of certain debts. The Chapter 13 Plan is a powerful tool to force creditors to restructure your debts to payments you can afford and in most cases lower your unsecured debts.
The following are the primary reasons for filing for Chapter 13 Bankruptcy:
1. You are Above the State Median Income.
If you are above the state median income for your family or household size, do not otherwise past the means test, and/or have disposable income of over $100 after your reasonable and necessary living expenses, you will typically be required to file a Chapter 13 bankruptcy petition and repay a portion of your unsecured debts over 1 3 or 5 year period (an experienced bankruptcy attorney will determine whether your payments will be for 3 or 5 years.) At the end of your 3 or 5 year period, the remaining unpaid balance of your unsecured debts will be permanently discharged (just like a Chapter 7 Bankruptcy) and your bankruptcy case will be closed.
2. You are Behind in Your Mortgage(s), But Want to Keep Your Home.
Chapter 13 Bankruptcy Plan allows you to catch up in your mortgage(s) and repay the amount you are behind for up to 5 years until you are caught up with your mortgage payment(s). Typically, you must resume paying your regular mortgage payments plus an additional portion of your arrearage every month until you are caught up.
3. Gettting Rid of Your Second Mortgage in Chapter 13 Bankruptcy.
In this declining real estate market, if your home is appraised at less than the amount of your first mortgage, filing for Chapter 13 bankruptcy can effectively discharge your second and any other succeeding mortgages. You will need a professional, indisputable appraisal of your home that the value of your home is less than your first mortgage for a bankruptcy judge to approve the removal of your second mortgage. This process also requires litigation to discharge the second mortgage. Additional legal documents must filed and at least one additional hearing is also required to have the lien on your second mortgage striped from your home. An experienced bankruptcy attorney can represent you through this legal process.
4. Stop Car Repossessions.
Chapter 13 bankrupcy stops car repossession actions and can restructure your car loan up to 5 years to a lower payment you can afford.
5. Lower Your Auto Loan Payment.
As stated above, Chaper 13 bankrupctcy stops car repossession actions and can restructure your car loan up to 5 years to a lower payment you can afford. It can also usually lower your interest rate on your car loan if your current interest rate on your auto is above 5%.
6. Lower Your Auto Loan Balance.
If your car loan is over 2 1/5 years old, Cahpater 13 bankruptcy can lower your car loan balance to the current fair market value of your vehicle if your loan balance is higher than the current market value. Your interest rate can also be lowered and your car loan at your new lower balance must be repaid in full within 5 years.
7. Lower Your Tax Debt.
Chapter 13 bankruptcy lowers your tax debt by lowering the interest rate on non-dischargeable taxes so long as your taxes are paid completely over a maximum of 5 years. You can also lower penalties and interest in past due child support and repay your child support debt in a Chapter 13 Bankruptcy plan.
8. Lower your Student Loan Payments.
Although student loan debt can rarely be discharged in Chapter 13 Bankruptcy, you can still use Chapter 13 Bankruptcy to drastically lower your student loan payments for up to 5 years.
9. Get Your Drivers License Back.
Chapter 13 Bankruptcy allows you to set up a payment plan for court fines that are causing your drivers license to be suspended. Immediately after filing your Chapter 13 Bankruptcy Petition and Plan, you can contact the Washington State Deparement of Licensing and have your drivers license reinstated as you make payments on your court fines through your Chapter 13 plan.
10. You have Filed a Chapter 7 Bankruptcy Within the Past 8 Years.
Even if you otherwise qualify for Chapter 7 bankruptcy, if you have filed a Chapter 7 Bankruptcy in the past 7 years where you received a discharge of our unsecured debts, you cannot file another Chapter 7 Bankruptcy for at least another 8 years from your prior filing date. However, you can still file a Chapter 13 Bankruptcy if it has been at least 4 years from Chapter 7 Bankruptcy fillng date. A Chapter 13 Bankruptcy, you may still be able to make very small payments back to your creditors for 3 years, many times less than 10% of your total unsecured debt, and receive a discahrge of the balance of your unsecured debt at the end of this 3 year payment period.
If You Can't Make Your Plan Payments.
If you cannot finish a Chapter 13 repayment plan (for example, you lose your job six months into the plan and can't keep up the payments) the bankruptcy trustee may modify your plan, or you may be able to convert your case to a Chapter 7 bankruptcy to discharge your debts, even if it means surrendering some property you intended to keep in a Chapter 13 Bankruptcy.
Chapter 13 Debt Limits:
Your secured debts cannot exceed $1,010,650, and your unsecured debts cannot be more than $336,900 in a Chapter 13 Banruptcy.
A "secured debt" is debt sucha as a mortgage or car loan one that gives a creditor the right to take a specific item of such as your house or car if you don't pay the debt. An "unsecured debt" is uncollaterized debt such as credit card debt or medical bills.
Call The Everett Debt Doctors Today for a Free Confidential Attorney Consultation: (425) 249-7156
Snohomish County bankruptcy lawyer David M. Lux represents individuals throughout the Great Puget Sound Region and Snohomish County, including Everett, Arlington, Mukilteo, Mountlake Terrace,Granite Falls, Bothell, Snohomish, Marysville, Mill Creek, Lynnwood, Mukilteo, Lake Stevens, Monroe, Duvall, and Stanwood, WA.