Filing Chapter 13 Bankruptcy in Pensacola
You may one day find that you have the need to file bankruptcy in order to stop your creditors from foreclosing on your house or repossessing your car, truck, boat or motorcycle.
Chapter 13 bankruptcy is a reorganization bankruptcy which allows debtors with a steady income to repay the creditors monthly based on a court supervised payment plan. Once the court approves this repayment plan, the creditors are barred from harassing you for payment, but you must stick to the agreed upon plan.
The timeframe for the repayment of debt is usually between 3 to 5 years in Chapter 13 bankruptcy. The debtor should have the ability to repay the debt within that repayment period from their income. If the debtor is consistent in following the repayment plan but unable to pay off all outstanding debt within the period, then any remaining unsecured debts like credit card debts and personal loans will be discharged. The secured debts like student loans, alimony and taxes must be fully paid within the 3-5 year period. The entire payment plan is supervised by the bankruptcy court. The court will determine the amount to be repaid monthly based on your disposable income and expenses.
Eligibility for Chapter 13 bankruptcy
The Florida means test is used to determine the amount the debtor can repay monthly.
- Individuals, whether the owner of an unincorporated business, self-employed, or salary earner is eligible for Chapter 13.
- You must show that you are capable of paying the monthly debts.
- The debtor’s secured debts must be less than $1,184,200 and their unsecured debts must be less than $394,752. The amounts are open to changes depending on the consumer price index.
- You must prove that you have filed taxes for the past 4 years.
- You may be ineligible for Chapter 13 if in the past 180 days your previous bankruptcy petition was dismissed on the grounds of your failure to obey court orders or appear in court.
- If you want to file Chapter 13, you must partake in credit counseling from an approved organization.
Advantages of Chapter 13 bankruptcy
- In Chapter 13, you can typically keep more of your property than you would be able to in a Chapter 7.
- The payment plan can reorganize repayments so that the amount you pay is reduced or the payment time extended.
Before you embark on a bankruptcy journey, consult a bankruptcy attorney to ascertain whether filing for bankruptcy is your best option and to help you determine which type of bankruptcy suits you most.