Montgomery, AL Chapter 13 Bankruptcy Attorneys
Serving Clients in Clanton and Surrounding Areas
Many people with steady incomes but exorbitant levels of debt think they have no choice but to keep their nose to the grindstone and hopefully make a dent in what they owe after many years. Bankruptcy, they believe, is for those who aren’t making ends meet and have debt collectors at their heels.
The U.S. Bankruptcy Code, however, offers a type of bankruptcy for those are make enough each month to get by. This type of bankruptcy is called Chapter 13, and it is a viable option for those who cannot qualify for Chapter 7 or would lose their property through the Chapter 7 liquidation process.
Contact Backus Law Group online or call (334) 490-6880 to speak with a Montgomery Chapter 13 Attorney. Your first consultation is free of charge and flexible payment plans are available when you choose our firm.
Do I Qualify for Chapter 13 Bankruptcy?
Below are the requirements for qualifying for Chapter 13:
- Your income tax filings must be current and you must be able to provide documentation for the last 4 years.
- You must have enough disposable income to complete your 3 - 5 year repayment plan while still living comfortably. If you do not have enough disposable income, you will not be able to file.
Your debt must be within the Chapter 13 limitations. This changes every
3 years. As of April 2019, the limits are:
- Unsecured debt: $419,275
- Secured debt limit: $1,257,850
At Backus Law Group, our attorney has more than 20 years of experience helping clients use Chapter 13 bankruptcy to restructure and reduce unmanageable debt. When you bring your case to our Montgomery firm, you can trust us to provide personalized recommendations that will help you achieve lasting financial security.
Frequently Asked Questions About Chapter 13
During your free initial consultation, we can answer any questions you have about Chapter 13 bankruptcy and related matters. In the meantime, here are the answers to some of the most common questions we receive. Keep in mind, however, that this is general information, and it can never replace personalized guidance from our attorney.
How Does Chapter 13 Work?
Chapter 13 is a form of debt reorganization. You and your attorney will propose a 3-5-year repayment plan to the court, and it must use all your projected disposable income (i.e. income leftover after necessary expenses). If you complete this plan, the court can discharge whatever unsecured debt remains.
Below is an overview of the filing process:
- Start by attending a credit counseling course. This step is mandatory.
- Have your bankruptcy lawyer file the petition. Keep in mind that there is a filing fee and you will need to present the certificate of completion for the credit counseling course.
- Provide the proposed repayment plan. The creditors and trustees are allowed to reject it, however, you can make changes until all parties are satisfied.
- Attend the confirmation hearing. Here, the creditors will be allowed to object to your repayment plan, but if no one does, the bankruptcy court will approve it.
- After it is confirmed at court, follow and complete the repayment plan as it was outlined.
What Debt Can Chapter 13 Eliminate?
Like other forms of bankruptcy, Chapter 13 generally discharges medical debt, credit card debt, utility bills, personal loans, and other forms of unsecured debt.
Will I Lose My Property if I File Chapter 13?
Unlike Chapter 7, Chapter 13 does not involve a liquidation process. Chapter 13 bankruptcy itself will not jeopardize your property ownership.
You might lose your property, however, if you aren’t caught up on arrears by the end of your case. When you file Chapter 13, the court will issue an automatic stay, which prohibits your creditors from collecting your debt or seizing collateral. You’ll be safe, therefore, from processes like foreclosure, but this protection only lasts for the duration of your case. Once the court issues the final order, the automatic stay will lift, and your lenders may take any property attached to debt if you are still behind on payments.
People often use Chapter 13 specifically to stop processes like foreclosure. Because the Chapter 13 process takes 3-5 years, you will have 3-5 years of protection against your lender, during which you can continue to make regular payments and catch up on arrears.
Can Chapter 13 Reduce My Mortgage or Car Loan?
It depends. Your options here include:
- Lien-stripping. The court may discharge your second and/or third mortgage if you owe more on the first mortgage than your property is worth. Unfortunately, the court will not be able to reduce the first mortgage on your primary residence.
- Cramdown. The court may reduce the principal on your auto loan down to the fair market value of your vehicle. You might be able to do this with real estate, as well, but not your primary residence.
Is There a Chapter 13 Means Test?
No. Chapter 7 uses a means test to prevent people from filing if they make more than enough to repay their debt without assistance. There is no income limit for Chapter 13, although a higher income and total equity in assets will give you a higher monthly payment for your 3-5-year repayment plan.
Speak with our Montgomery bankruptcy attorney about these processes, as they can be complex, and not everyone will qualify.
Ready to learn more about what Chapter 13 could do for you? Give us a call at (334) 490-6880 or contact us online today. We can schedule appointments after regular business hours and over the weekend.
At the Backus Law Group, our attorney has more than 20 years of experience assisting clients with bankruptcy and related matters. You can depend on him to provide sound counsel that advances your best interests. As a small, local law firm, we have a personal commitment to serving our community, and we look forward to putting our legal knowledge and skills to work for your future.
Constant Communication with Clients
Flexible Payment Plans Available
20+ Years Established as a Firm
Financial issues can be difficult to navigate, but not when Gary Backus is on your side. Reach out to us today to learn how the team at Backus Law Group can help with your case.Schedule a Consultation Today!