Stop Creditor Actions and Pay Your Debts Over Time
There are many reasons why a debtor may need to — or choose to — file a Chapter 13 bankruptcy. You may need Chapter 13 to save your home or protect other assets. You may not meet the criteria to eliminate debts in Chapter 7. You may need to extend debts that are not dischargeable. There are also advantages to Chapter 13 not available in Chapter 7.
Chapter 13 provides immediate relief from all collection efforts and allows you to spread your debts over several years without further penalties or creditor actions. The Minnesota bankruptcy lawyers of Hoglund, Chwialkowski & Mrozik, PLLC, can help you determine if Chapter 13 bankruptcy makes sense for you.
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Minnesota Chapter 13 Bankruptcy Lawyers
A Chapter 13 bankruptcy, also called reorganization, provides protection from creditors while you repay a portion of your debts. A Chapter 13 repayment plan involves a fixed monthly payment for 36 to 60 months. At the end of your plan, the remainder of eligible debts is discharged.
Payments are based on your ability to pay. Typically our clients repayments range from 1% to 100% depending on the situation(such as credit cards and medical bills). Rather than paying up front, our No Upfront Ch. 13 Fee policy allows clients to roll their attorney fees into their repayment plan. The effect of this payment arrangement is to reduce the amount ultimately paid to the creditors through the Chapter 13 plan.
Who Is a Candidate for Chapter 13 Reorganization?
It is usually preferable to discharge debts outright in Chapter 7. But there are many scenarios when Chapter 13 is necessary or beneficial:
- Not eligible for Chapter 7 under the means test
- Saving a home from foreclosure
- Preventing vehicle repossession
- Protecting non-exempt assets
- Prior Chapter 7 filing within eight years
- Non-dischargeable debts (taxes, student loans, child support)
- Possibly stripping a second mortgage (this issue currently is under court appeal)
The automatic stay of bankruptcy halts all creditor actions and debt collection, including foreclosure, repossession, wage garnishment, liens and lawsuits. You do not forfeit any property in a Chapter 13 bankruptcy, but the amount your creditors must receive over the course of the Chapter 13 plan can be impacted by the amount of property you own that is not exempt.
Bankruptcy law requires every person who files bankruptcy to take two classes from a U.S. Trustee-approved provider: a credit counseling course prior to filing and a financial management course after the plan is approved. These courses can often be completed on the Internet or by phone and take approximately one hour each.
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In a free consultation, our experienced attorneys will examine your finances, your assets and your debt to gauge your best option. Chapter 13 plans require budgeting and discipline and do not leave much margin for the setbacks of life. We work with clients to put together a realistic budget that gives them the best chance for completion. Contact us today.
Our firm is available to assist throughout the duration of your Chapter 13 bankruptcy. If circumstances change for the worse, it may be possible to modify a Chapter 13 plan or to convert it to a Chapter 7 discharge.