Chapter 13 Bankruptcy Guide

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  • 8/7/2019 Chapter 13 Bankruptcy Guide


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


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    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

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

    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


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

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

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

    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 sta