Jacksonville Chapter 13 Bankruptcy Lawyer
Filing for bankruptcy means different things depending on who is filing and the chapter under which they file. When it comes to Chapter 13 bankruptcies, only individuals and couples can file. Businesses, including corporations, LLCs, and partnerships, cannot choose this form of bankruptcy, although they have other available options.
Chapter 13 can provide some advantages over filing a Chapter 7 bankruptcy. Before filing bankruptcy, you should consult with an experienced Jacksonville Chapter 13 bankruptcy lawyer who can help you understand your rights, obligations, and the best steps to take given your specific financial situation. The Law Offices of Carol M. Galloway can counsel you through this challenging time so that you can start building a better future. Call us today at 904-694-5489 for a no-cost, initial consultation.
Who Can File Chapter 13 Bankruptcy
In general, people who file for Chapter 13 bankruptcies are those with a steady and reliable income. Under Chapter 13, a person can adjust debts and restructure payments rather than outright eliminating many debts as one does in a Chapter 7 bankruptcy. Of course, eliminating debts is the best option for many people as it provides a clean slate. Not everyone can file Chapter 7 bankruptcy, though. Individuals who make more than the median income for their household size cannot file Chapter 7 unless they qualify based on a “means test.” The means test involves calculations of income and expenses and requires that the person not be reasonably able to make payments as they would in a Chapter 13 bankruptcy. Many people will not qualify for this form of bankruptcy but can still file and benefit from Chapter 13.
If a person does not have a regular income, it is unlikely that Chapter 13 will work for them. However, it is not just salaried wage earners who can qualify. Individuals who make a regular living but are self-employed or contractors can often file under Chapter 13 as well.
Who Will Benefit From Chapter 13 Bankruptcies
There are many benefits from filing for Chapter 13, which helps people who might be behind in certain payments, such as their mortgage or car. By restructuring their debt, these individuals have an opportunity to catch up with overdue payments and keep their homes or car.
If creditors are pursuing collections against a person, that individual can also benefit from protections provided by Chapter 13, which places a stay on all actions. The stay prevents creditors from garnishing wages, withdrawing from a bank account, repossessing vehicles, and foreclosing on the debtor’s home.
It is also worth noting that many people face financial hardship because of debts protected by law and which the debtor cannot discharge in Chapter 7 bankruptcy. For those whose financial struggles are predominantly caused by spousal support, child support, school loans, tax liabilities, or a combination of protected, secured debt, Chapter 7 might not prove useful. Filing Chapter 7 will not rid the debtor of any of those obligations. Chapter 13 will help the person build a repayment plan to get back on track within a few years.
Also, sometimes an individual has expenses that another person co-signed to help them out. Filing Chapter 7 does not protect co-signers from having to repay a debt. Chapter 13 might help prevent co-signers from being hit with the bankrupt person’s expenses.
Obligations Created by Chapter 13 Bankruptcy
When a person files under Chapter 13, the creditors and debtor will work out a repayment plan that focuses on repayment over three or five years. A court must approve the plan and can deny any unreasonable repayment schedules.
To maintain the protections of a Chapter 13 bankruptcy, the debtor must make the payments as planned. The funds might pass directly from the person’s wages to the bankruptcy trustee. For the debtor, this means living on a fixed income to maintain the schedule. If the debtor wishes to incur new debt in the course of the repayment period, they will have to consult with the trustee. In many cases, any new debt will impact the ability to repay as scheduled.
Of course, life is unpredictable, and sometimes continuing to make such payments might not be possible. In certain circumstances, a court might allow the person to discharge some of their debts. The reason that the person cannot repay as scheduled must not be their fault. For instance, a sudden debilitating injury or illness that prevents the person from earning their normal income could lead to the ability to discharge some debts. A discharge will only work for unsecured debts and in cases where restructuring is not possible. The creditors must also have received at least what they would have if they filed Chapter 7 bankruptcy.
A Jacksonville Chapter 13 Bankruptcy Attorney Can Help
Filing Chapter 13 bankruptcy can be intimidating and confusing. There are complicated laws that detail the steps the individual must take to receive protection from creditors. As a debtor, you have rights, and bankruptcy laws exist to help you get your finances back on track. Call the Law Offices of Carol M. Galloway at 904-694-5489 to consult with a Jacksonville Chapter 13 bankruptcy lawyer dedicated to your success.