Centerville Chapter 13 Bankruptcy Attorney

Do You Qualify for Chapter 13 Bankruptcy?

If you have a regular income, whether from a job, social security, a pension or retirement income, a business, unemployment, or even regular support from your family, you likely qualify to file for an Ohio Chapter 13 bankruptcy. The debts which can be discharged (after you complete your repayment plan) in a Chapter 13 bankruptcy (non-priority unsecured debts) include:

• Medical bills (the primary reason many people file Chapter 13 bankruptcy);
• Credit card debt as well as personal loans, signature loans or any loan not secured by personal property (after the repayment plan is complete);
• Payday loans;
• Rent-to-own loans (although the furniture or other item must usually be returned);
• Past due utilities;
• Older tax obligations, so long as no fraud was committed, and you filed your returns in a timely manner, or
• Any breach of contract or negligence-related debt so long as it is not a debt for willful or malicious injury to another person.

Not all debts are treated equally in a Chapter 13 bankruptcy, rather there are several categories of debt. You will first determine which of your debts are secured and which are unsecured. Unsecured debt is further divided into priority and non-priority debt. Priority unsecured debts are paid prior to non-priority debts and are not dischargeable. Non-priority unsecured debts are paid only if there is money left over.  Some debts are not dischargeable under any circumstances. These debts include:

• Child support;
• Spousal support
• Any criminal fines or restitution orders;
• Any fine or penalty owed to a governmental agency;
• Any recent income tax debt;
• Any debts associated with an intoxicated driving conviction;
• Any debt arising from a malicious act on your part;
• Any debts or creditors you fail to list in your bankruptcy filing;
• Student loans, and
• Fraudulent debts.

What is a “Cram Down?”

If you have collateral loans, you may be able to keep the property put up as collateral for the loan by paying the value of the property—usually much less than what you owe. The process to accomplish this is known as a “cram down.” As an example, suppose you borrow $10,000, using your car as collateral. While you must pay the company you owe the money to something, you are only required to pay the actual value of your car. If your car is only worth $5,000, then rather than owing $10,000 to the company, you will only owe $5,000.

Keeping Your Home in a Chapter 13 Bankruptcy

A Chapter 13 bankruptcy plan allows you to stop foreclosure proceedings, allowing you 3-5 years to catch up on any missed payments—so long as the foreclosure proceeding sale date has not yet occurred. If you have a second mortgage on your home, a Chapter 13 bankruptcy could discharge that debt, treating it like an unsecured debt. Any judgment lien attached to your home due to a lawsuit can be discharged through Chapter 13 bankruptcy as well.

If you are unsure whether you really want to keep your home, you are allowed to file Chapter 13 with your original intent to keep the house, then if you experience a significant change in your life circumstances, Chapter 13 bankruptcy allows you to modify the plan, dropping the home from the plan and discharging the deficiency. If you happen to be buying a home on contract, the interest could be protected by the residential real estate exemption. Further, since many purchases on contract have a balloon payment, Chapter 13 makes it possible to extend the time you have to make that balloon payment.

How are Co-Signers Treated?

Family members often co-sign for a car, home or other real property. Under Chapter 13, the co-signer has only limited protection under Chapter 13. If you are repaying 100 percent of your debt under your Chapter 13 plan, then your co-signer will be protected, however few plans pay back 100 percent. This makes your co-signer liable for the portion of the debt which is discharged under Chapter 13 bankruptcy. Co-signers are required to be listed in your Chapter 13 repayment plan.

What is the Actual Process for Filing Chapter 13 Bankruptcy?