Payment Plan Bankrupcy, Chapter 13

In a Chapter 13 bankruptcy, debt is not immediately discharged. Instead, a three- to five-year repayment plan is set up. After completion of the plan, any remaining debt is discharged unless some disqualifying circumstance exists.

Chapter 13 aims to help people get caught up on secured loans (like mortgages) and resolve most debts. This type of bankruptcy carries certain benefits not available through Chapter 7 bankruptcy and is often referred to as “wage earners' bankruptcy because you must have a regular income to qualify.

The criteria to qualify for Chapter 13 bankruptcy are technical and include:

• Regular Income. You have a regular income, even if self-employed or operating an unincorporated business.

• Individual or Married Couple. You are filing as an individual or married couple and not as an organization, company, or partnership

• Unsecured Debt Limit. You have unsecured debts that do not exceed $465,275 [subject to change pursuant to 11 U.S.C. § 109(e)]

• Secured Debt Limit. You have secured debts that do not exceed $1,395,875 [subject to change pursuant to 11 U.S.C. § 109(e)]

• No Prior Bankruptcy Dismissals. A prior bankruptcy petition was not dismissed within the past 180 days due to a willful failure to appear before the court or comply with orders of the court. A prior bankruptcy petition was also not voluntarily dismissed within the past 180 days because creditors asked the bankruptcy court to lift an automatic stay to recover property upon which they hold liens
  

• Credit Counseling. You completed credit counseling from an approved credit counseling agency
  

Any person or company can file bankruptcy under Chapter 13 if they

• Own property in the United States

• Have a permanent residence in the United States

• Have not filed bankruptcy under Chapter 7 within the last eight years

• Have not filed bankruptcy under Chapter 13 within the last two years

• Satisfy eligibility criteria
  

Even though you can file for Chapter 7 bankruptcy, it does not mean you should. You should consider Chapter 7 bankruptcy if

• You are behind mortgage payments, risk foreclosure, and do not want to lose your home

• You are behind on loan payments for vehicles (like cars, motorcycles, or boats), risk repossession, and do not want to keep the vehicle

• You are behind on utility payments, risk having utilities shut off, and to keep on the electricity, gas, and/or water

• You have already filed for Chapter 13 bankruptcy more than four years ago and are still struggling to pay off debt

• You need to protect your finances after a creditor has filed a lawsuit, garnished your wages, or implemented a bank freeze

• You have a sole proprietorship and are behind on payments to third parties or have accumulated too much debt––you can file Chapter 13 under your name but not the name of the sole proprietorship if different than your legal name

• You have student loans, which are non-dischargeable debt––you cannot eliminate this debt under Chapter 7 but under Chapter 13, if you can prove economic hardship, there is a chance it can be discharged.

• Importantly, you may typically keep your home, your car, and other assets in most Chapter 13 bankruptcy proceedings.

On the other hand, you may not want to file for bankruptcy in Wyoming if you think you will be unable to fully commit to the repayment plan. Chapter 13 bankruptcies have a higher failure rate than Chapter 7 bankruptcies. If you fail, creditors can once again begin harassing you for payment, garnishing wages, and freezing bank accounts. You may also lose some assets you fought so hard to keep, like your home or car.

You should speak to a Chapter 13 bankruptcy attorney to obtain advice on the best debt solution for you. After reviewing your financial situation, Hampton Young Law can also discuss with you the real chances you have at succeeding with a Chapter 13 bankruptcy.

The cost to file Chapter 13 bankruptcy in Wyoming depends on how complex your bankruptcy may be. Certain fees mandated by the U.S. Bankruptcy Court must be paid when you file your bankruptcy petition. Fees for Chapter 13 include:

• Filing fee

• Administrative fee

• Trustee surcharge

These fees are subject to change periodically but are currently set at $313 and are similar to Chapter 7 filing fees.

Retaining legal representation adds to the cost. The basic fee for a Chapter 13 proceeding is set by the U.S. Bankruptcy Court in Wyoming at $3,500.00. Fees over that must be approved by the Bankruptcy Court, and will depend on the experience, skill, and total sum of the services provided. When compared to Chapter 7 Bankruptcy cases, please understand a Chapter 13 requires considerably more extensive work.

In terms of costs, the repayment plan is a cost all on its own. The amount of the payments will depend on your income, the amount of your debt, and the type of debt.

There are number of documents and information you need when you file for Chapter 13 bankruptcy in Wyoming. Here's a list of what you may need to begin the process.

• List of creditors, including a copy of the most recent statement or underlying document for each creditor

• List of cosigners, including their names and addresses
  

• List of property – this includes real and personal property
  

• List of monthly living expenses – this includes food, clothing, shelter, utilities, medicine, transportation, taxes, etc.
  

• Source, amount, and frequency of income (paystubs are a good starting point)

Other helpful information includes things like:

• Most recent tax return

• Credit reports from Equifax, Experian, and TransUnion

• Bank account statements covering the last 12 months 

• Divorce decrees and/or domestic court orders related to debt and/or support obligations
  

Married spouses must both provide information on income and expenses. This is true even if only one spouse files for Chapter 13 bankruptcy. The bankruptcy court needs to determine what your total household financial situation is. Other documents will likely be needed, and I will advise you on exactly what those documents are––much of it will depend on the circumstances and your financial situation.

After you file for bankruptcy, you are given a case number and a Notice of Bankruptcy Case Filing, which Hampton Young Law will use to substantiate to any creditor that you are under the protection of an Automatic Stay. Your credit score will also be affected––Chapter 13 bankruptcy stays on your credit history for seven years.

The important thing to know here, however, is not what happens after you file Chapter 13, but what you are obligated to do after you file. Three main obligations include:

1. 341 Meeting of Creditors. You must attend the Meeting of the Creditors. If you have an attorney, your attorney will be present and guide you through the process. If you have provided all required documents and shared all assets and financial information, then you will likely not have to contribute in any way to the meeting, but you must attend.

2. Financial Management Course. This course must be completed before the end of the bankruptcy. Your bankruptcy will last for three to five years. You must pass the course and file the certificate with the court before the completion of the bankruptcy.
   

3. Payment Plan. You have a payment plan, and you must make timely payments to avoid problems. Your first payment is typically due the first of the month after bankruptcy is filed, but so long as it is received within the month, problems will not materialize. If you fail to timely make payments, bankruptcy could fail, and you may start receiving calls from creditors, have your wages garnished, or experience a freeze on your bank account. You also risk losing your home to foreclosure or having a vehicle repossessed.
   

All meetings and hearings are conducted by video in Wyoming. Committment to your end of the Chapter 13 Bankruptcy is key to successfully completing it. Any dischargeable debt that remains at the end of your bankruptcy will be discharged. Some may be completed prior to the scheduled end of your bankruptcy payment plan. You will get your debts in order and save your home and vehicles in the process.

At Hampton Young Law, we know how substantial debt can impact an individual or married couple. If you have difficulty paying bills, have a steady income, and want to save your home and vehicle, speak to Hampton Young Law today by filling out our online form or calling us at 307-797-2486 or email us at legalgeek@outlook.com. We will schedule a free 15-minute strategy session so that you get the answers you need to all your financial questions.