Chapter 13 Bankruptcy Guide

8/7/2019 Chapter 13 Bankruptcy Guide

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10615 JUDICIAL DRIVE SUITE 101 FAIRFAX, VA 22030877-891-4520

[email protected]


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Chapter 13 Bankruptcy Page 1

Vienna Law Group, P.C. 877-891-4520

Disclaimer and legal notice

This book is copyright 2010 Vienna Law Group. You may freely distribute

this book through email, your website, or other means, as long as it

remains intact. In fact, we believe the information in this book is so

important, we ask you to share it with those you feel may benefit from it.

Although this book provides a wealth of information about dealing with

lawsuits, debt collection and bankruptcy, it is intended to provide education

only. No portion of this book constitutes legal advice. Reading this book

does not establish client-attorney relationship. To receive legal advice, you

must hire an attorney.

Vienna Law Group

10615 Judicial Drive Suite 101Fairfax, VA 22030

877-891-4520

[email protected]
http://www.viennalawgroup.com/http://www.viennalawgroup.com/http://www.viennalawgroup.com/http://www.viennalawgroup.com/


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About this book

Unpaid debt has reached epic proportions in the United States. Where

personal debts for some used to add up to tens of thousands of dollars,

some people are now dealing with over a hundred thousand dollars in

personal debt with no relief in sight.

Such crushing debt leads to far more than an inability to pay the bills. The

stress of such overwhelming debt can lead to health issues, difficulties at

work and at home. It can even lead to an onset of depression.

In 2009 there were over 370,000 chapter 13 bankruptcy filings in the United

States.

To deal with the stressful burdens of out-of-control debt, many Americans

face the need to gain a fresh start. Job loss, medical issues divorce and

business failure stand at the top of the list of the many reasons

experienced which lead to insurmountable debt. For these people

bankruptcy may be the best solution.

This guide is intended to help you understand chapter 7 bankruptcy,

whether or not its the right option for you and what to do if you decide tofile. Youll also learn what your options are when it comes to protecting

yourself from people attempting to collect on debts.

This guide condenses volumes of information on these subjects into

something thats easy to understand for every reader. Every attempt has

been made to provide you with the most accurate information about the US

and Virginia legal system as they relate to the common issues of lawsuits,

debt collection and bankruptcy.

This guide is not, and cannot be, an exhaustive guide to every nuance of

the legal system, civil procedure and every possible eventuality you might

experience when being sued or when trying to sue someone. For that level

of guidance, you should hire an attorney. However, after reading this guide,


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you should find that guidance more productive and useful than if you didnt

have a basic understanding of the processes involved.

Information isnt advice so use this guide to gain a better understanding of

how bankruptcy might help you in your situation and then seek out advicefrom a qualified attorney who can help.

Read on and if you feel that youre ready to pursue filing chapter 7

bankruptcy protection, call us to set up a free consultation with one of our

bankruptcy specialists.

Vienna Law Group, P.C.

10615 Judicial Drive Suite 101

Fairfax, VA 22030877-891-4520

[email protected]


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Frequently asked questions and answers about Chapter 13 bankruptcy

What is Chapter 13 bankruptcy?

Chapter 13 is a form of personal bankruptcy that allows people to obtainprotection from creditors while undergoing a financial reorganization

supervised by a federal bankruptcy court. Its the most commonly available

option for those with steady incomes and who did not pass the chapter 7

bankruptcy means test.

It differs from Chapter 7 in that it requires a 5 year payment plan for some

or all debt to be approved by the court and carried out successfully before

any remaining debt is discharged.

Another difference between chapter 13 and chapter 7 is that with chapter

13 you get to keep most, and possibly all, of your property. Chapter 7 is

known as a liquidation bankruptcy because you usually have to surrender

most of your property to be distributed to your creditors to help pay for

some of your debt.

If you have a mortgage and are facing foreclosure, chapter 13 is a powerful

remedy. Filing can temporarily freeze the foreclosure process in its tracks

while youre given time to present your plan of reorganization. As long asyou remain current on your future mortgage payments, chapter 13 can help

you catch up on missed payments and sometimes reorganize your

mortgage entirely to help you keep your house and afford your payments

moving forward.

Chapter 13 is for those with less than $336,900 in unsecured debt and/or

less than $1,010,650 in secured debt. If you owe more than these amounts,

you should look into chapter 11 with your attorney.


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How does Chapter 13 work?

In a Chapter 13 filing, you file a set of documents known as the petition,

along with various schedules, a statement of affairs and other forms with

the bankruptcy court. These documents are reviewed by a court trustee

and by some or all of your other creditors.

Your filing also includes a plan of reorganization, which is a 5 year plan

devised to apply all disposable income to the payment of all, or a portion of,

the debt. This plan is approved by a trustee of the court who continues to

monitor the progress of the plan through its entirety.

Your disposable income is calculated through by applying a series of

allowed expenses for necessities to your average income from the past six

months. This is probably one of the most complex parts of the chapter 13bankruptcy process.

At the end of the plan period, the remaining debt is discharged, excluding

such debts which are undischargable by bankruptcy.

How is the plan of reorganization created and approved?

With the aid of your attorney, you will create a repayment plan that applies

your disposable income to the payment of your debts over what is typically

a five year period. This plan is reviewed by the bankruptcy court, along withyour creditors, and is approved by a judge.

Depending on the amount of disposable income available, some or all of

the debt may be paid off during this period.


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What is the filing fee for chapter 13?

There is a $274 filing fee for chapter 13 bankruptcy. If you don t have the

means, the court may approve to allow you to pay the filing fee in

installments. In addition to the court fee, you are also required to take a

credit counseling class, prior to filing. This may run an additional $100.

Is there a means test for Chapter 13?

Chapter 13 does not use a means test, as with Chapter 7, but does

calculate available disposable income based on the past six months. This

income calculation is very important and can be troublesome as well.

Because it is based on your average income over the past six months, and

not your current income, a recent drop in income, or a windfall like a bonus,

can skew that average and make it appear that you receive a monthly

income that is greater than what it actually is.

For example, if you were making $6,000 a month for the first three months

of the examined period and then $4,000 a month for the last three months,

your average income is calculated at $5,000 a month. If the court trustee

then forces you to devise a payment plan based on an income $1,000

greater than what you currently receive, you can imagine that its going to

be difficult to make the required monthly payments.

Some courts try to take current reality into consideration when making thecalculations for the disposable income to be applied to the payment of your

debts during your case. Even though the new bankruptcy laws seem to

have been designed to put you on the defensive, the intent of bankruptcy

as established by the powers granted in the Constitutionis to help

citizens get a fresh start from the effects of overwhelming debt and

eliminate the days of debtors prisons from the days of Charles Dickens.

Chapter 13 doesnt offer much of a solution if the plan youre forced to

accept fails in the first month because your real income cant support it.

Because of complexities like these, its important to have the representation

of a qualified attorney who knows the ins and outs of bankruptcy laws and

of your local courts handling your case.


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What other types of bankruptcy are there?

In addition to chapter 13, there are other types of bankruptcies which deal

with different types of situations. In case youre wondering, the chapter of

the bankruptcy refers to the chapter in the bankruptcy code where the laws

are defined.

Heres a quick overview of the other types of bankruptcies.

Chapter 7 bankruptcy

Chapter 7 is also known as a liquidation bankruptcy. Instead of using a

payment program to repay some or all of your debts, your assets are

liquidated to pay some or all of your debts and the remaining debt is

discharged.

Chapter 7 is the most common form of bankruptcy but due to new laws

passed in 2005, it is difficult for many to qualify for chapter 7. To qualify for

chapter 7 you must pass a means test which shows a very low income or

no income. Because of this, most with regular incomes and sizeable assets

must use chapter 13 for bankruptcy protection.

Chapters 9, 11, 12 and 15 bankruptcy

Chapters 9, 11, 12 and 15 bankruptcy are less common as they deal with

more specific groups of people.

Chapter 11 Bankruptcy - Business / Corporate Bankruptcy.

Chapter 11 is the type of bankruptcy mentioned in the news most often.

Chapter 11 bankruptcies are high-profile bankruptcies used mainly by

corporations, limited liability companies and partnerships to reorganize their

financial affairs. Individuals may file for bankruptcy under Chapter 11 but it

is rare. Chapter 11 bankruptcy is a time consuming and expensive chapter,

therefore it is only appropriate for individuals whose circumstances make

Chapter 7 or Chapter 13 inapplicable or inappropriate. Less than onepercent of all bankruptcy filings are Chapter 11s.

Chapter 9 Bankruptcy - Municipal Entities And Railroad Companies.

Chapter 9 bankruptcy is the chapter that railroad companies and municipal

entities - cities, counties, school districts, and gas and highway authorities -

use when they file bankruptcy. Individuals cannot use Chapter 9.


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Chapter 12 Bankruptcy - Family Farming Operations.

Chapter 12 is used by family farmers. An individual that does not own

agricultural property cannot use Chapter 12.

Chapter 15 Bankruptcy - Foreign Debtors.Chapter 15 is the chapter used by United States courts to administer

assets of companies who have filed for bankruptcy protection in foreign

jurisdictions.


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How does filing a Chapter 7 petition keep creditors away?

After filing for Chapter 13, the court issues an "automatic stay" which

legally bars creditors from contacting or making collection attempts from

the debtor. This is one of the most powerful protective features of

bankruptcy protection.

A pending repossession of your car or a foreclosure auction on your house

is immediately stopped.

Other collection attempts are also frozen by the automatic stay. The calls,

the letters, pending lawsuits and attempts to seize assets and freeze bank

accounts are all held up by the automatic stay.

What is creditor preferencing?

When filing for bankruptcy, your past financial transactions will be

examined. If you have made any large payments to creditors in the past 90

daysdefined as being great than $600that payment may be

retroactively cancelled by the courts. This is intended to ensure that no

preference is made to pay one creditor and not another.

How are payments made?

The trustee assigned to your bankruptcy will receive your monthly payment

and the distribute payments to creditors according to the court approved

plan.


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What is the role of the court trustee during my bankruptcy?

The trustee assigned to your bankruptcy case is responsible for the

following tasks:

Examine your proposed plan of repayment

Receive monthly payments and distribute money to the creditors

Monitor your monthly income

Monitor your duty to file tax returns and an annual financial statement

The trustee is paid from a portion of your monthly payment so you can be

sure that he or she will not only examine your plan thoroughly, but he or

she also has a vested interest in the successful execution of your plan.

While you may at times feel that the court trustee is your adversary, its in

your best interests to work closely with him or her and to maintain open and

transparent communications.

What happens if I stop making payments?

If you stop making the required payments to the trustee your case will

probably be dismissed and the automatic stay will be lifted. After this

happens, creditors may once again pursue you directly for repayment of

debts.

What happens if my income increases during my chapter 13 case?

During the entirety of your chapter 13 case, the court trustee is in charge of

your finances. The court trustee even monitors your month income and

banking activities.

As all disposable income is allocated for the payment of debt during the

term of your court-approved payment plan, any increase in income isby

definitiondisposable income and will be used to make additional

payments to the creditors.

If your income increases, or if you experience some sort of windfall, the

trustee will use this extra money to accelerate the payments according to

your plan.


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Increases in income may include a raise at your job, a new client, royalties,

or even winning the lottery. Any such increase in income must be reported

promptly. Do not make any attempts to hide such extra income. If you do

so, and are caught, you could face serious criminal penalties.

What happens if my income decreases during my chapter 13 case?

It seems as though the bankruptcy laws were written with the assumption

that your income will never decrease and you are expected to make the

same income, or better, through the entirety of your chapter 13 case.

Obviously reality does not match this assumption. Many people end up

filing for bankruptcy protection because of a substantial decrease in income

in the first place. If you experience a drop in income during your case,

inform your trustee immediately.

The result may be a modification to your payment plan, based on the newly

calculated disposable income. In the event of a completely loss of income

it's also possible that your bankruptcy will be converted into a chapter 7

filing and the remaining debt will be discharged and your case will be

closed.

What is required of me during my chapter 13 case?

Through the term of your case, you are required to file your income taxeson time--of course, you should be doing this anyway--and provide a copy of

your filing to the court trustee. Your creditors may also request a copy of

your tax returns each year. If the request is made, you're obligated to

provide them with copies as well.

Each year you will also provide an additional financial statement to the

trustee. This is intended to confirm transparency on your part during the

course of your bankruptcy case. It also provides evidence against you if it's

found that you were hiding income, or assets, to avoid paying yourcreditors--so always be accurate and truthful.

Finally, you must make your payments on time, throughout the entirety of

your case.


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What debts are not discharged in a chapter 13 bankruptcy?

While you are protected from most types of debt with bankruptcy, some

debts are not discharged.

Taxes due within the last three years or taxes not assessed becauseof fraud

Debts not listed on your bankruptcy papers

Debts for domestic support obligations (alimony, child support, etc)

Interest on non-dischargeable debts

Debts for intentional injury

Debts for certain government fines and penalties

Debts for student loans

Debts that were or could have been listed in a prior bankruptcy casein which you either waived your discharge or your discharge was

denied

Debts owed to a creditor for a total of more than $500 for the

purchase of "luxury goods" 90 days before you filed the petition for

bankruptcy

Cash advances that total more than $750

Debt for personal injury judgments resulting from a DUI-related

accident HOA fees

Pension, profit-sharing, stock bonus or such other plan payments


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What information is needed to file a Chapter 13 Petition?

To file for bankruptcy, you will be required to provide a significant amount

of information to the court, as a part of your filing. It is essential that the

information be accurate.

Names and addresses of all creditors, along with account numbers.

o unsecured claims (credit cards, medical bills, personal loans);

o secured claims (mortgages, liens, security interests,

judgments);

o unsecured priority claims (including alimony and taxes);

o unexpired contracts and leases (leases, leases, and other

active contracts).

Ownership interest in real estate

Inventory of personal property including the value and locations for

o bank accounts;

o household goods and furnishings;

o furs;

o jewelry;

o cars;

o pensions;

o IRAs;

o Stocks;o life insurance policies, and cash value

Personal cash flow statement


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Should I use a lawyer for filing chapter 13 bankruptcy?

The two most common forms of bankruptcychapters 7 and 13are

confusing to even the most intelligent. Since the passage of new

bankruptcy laws in 2005, the process for filing bankruptcyand especially

the navigation of the required formshas become very complex. For thisreason alone, you should consider hiring an experienced attorney to help

you with your case.

To quote Albin Renauer, co-author of How to File for Chapter 7 Bankruptcy,

The "Bankruptcy Reform and Consumer Protection Act of 2005"

(BAPCPA) is a bad law. Some lawyers and law professors have taken to

calling it the "Bankruptcy Abuse Reform Fiasco" (BARF). It's based on false

assumptions about why people get into financial trouble and imposes

additional rules and paperwork on people already overwhelmed by bad luck

and unpayable debt.

If you want to go it alone, the forms are available on the web. The state of

Virginia has placed them online as PDF files which can be filled out through

your computer. You can find the entire list of forms here

http://www.vaeb.uscourts.gov/scripts/formsqry.exe

We recommend a qualified attorney to help you with your case, and not just

because we earn a fee by providing the service. The issues leading tobankruptcy are very stressful for anyone. With the complexity of the new

laws its simply too easy to get lost in the emotion and make a mistake.

Thats what legal representation is for.

Let us help you. Contact us and schedule a meeting with one of our

bankruptcy specialists. Well look at your case and make the

recommendation that we feel is in your best interests.

Vienna Law Group10615 Judicial Drive Suite 101

Fairfax, VA 22030

877-891-4520

[email protected]
http://www.viennalawgroup.com/http://www.viennalawgroup.com/http://www.vaeb.uscourts.gov/scripts/formsqry.exehttp://www.vaeb.uscourts.gov/scripts/formsqry.exehttp://www.viennalawgroup.com/http://www.viennalawgroup.com/


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About The Author

Jad Sarsour, Esq. has experience in a wide

variety of fields and he is passionate about

sharing his knowledge with others both ininteractions with clients and through writing books

available to the general public on diverse legal

topics of concern to common citizens. He used to

work in the commodity industry, handling financial instruments such as

Medium Term Notes (MTNS), Bank Guarantees (BG), and Treasury Notes.

He has used his legal expertise to successfully navigate and close

business transactions in the sugar, oil, and natural gas industries. His

knowledge of international issues in business law proved invaluable inhelping several American companies to set up operations in the Middle

East. In addition to working with established companies, Jad has advised

budding entrepreneurs, helping one client raise 350 million dollars in start-

up capital for a new venture. Jad has also worked on many Chapter 7 and

13 bankruptcy cases.

EDUCATION

George Mason University

Georgetown University- 2000

Michigan State College of Law East Lansing J.D.

BAR ADMISSIONS

Virginia State Bar

Virginia Supreme Court

4th Circuit Court of Appeals

U.S. District Court, Eastern District of Virginia

U.S. District Court, Western District of Virginia U.S. Bankruptcy Court, Western District of Virginia

U.S. Bankruptcy Court, Eastern District of Virginia


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Documents

Chapter 13 Bankruptcy Guide