We at The Law Offices of Thomas Maronick Jr are committed to helping you in your Chapter 13 bankruptcy case.
We often get the question, "What is a Chapter 13 and how does it differ from a Chapter 7 filing?" and if you are eligible for a Chapter 13, what is the plan and how does it work?
Let's try to explain some of this here:
What A Chapter 13 Bankruptcy Is And Isn't
A Chapter 13 means that you do not qualify for a Chapter 7 (total discharge) case. Even in a Chapter 7 asset case, you are still getting rid of all of your debt. You won't be paying the debt back.
Most Chapter 7s are "no asset" cases, meaning that no money will be available to distribute to the creditors.
A Chapter 13 is different in that it is generally part reorganization plan/part debt discharge. In a 13, you will be repaying a minimum of 15 percent of your general unsecured creditors. Those involve debts like your credit card bills and medical bills that are not linked to a particular asset.
By contrast money you owe on a car is called secured asset debt. That means you will have to pay the money you owe in arrearage if any into the plan, and may or may not have to pay the regular monthly payment you owe the credit holder for the asset (be it a mortgage bank for your house or financing company for your car) if you intend to keep the asset.
Many people due to the amount of equity in their home or the amount of annual salary they make will end up paying more than 15 percent. They may actually end up paying 100 percent of the debt that is owed either over a three-year or five-year plan, depending on the amount of assets they have over limits for bankruptcy.
The best thing about a Chapter 13 is that it stops the clock on certain actions. If a home is set for foreclosure auction, a Chapter 13 could not only immediately stop the proceedings, but protect the asset.
For that reason, Chapter 13 filings are much longer in nature and more expensive than a Chapter 7 because often significantly more work is involved and the cases are far more complicated.
The Chapter 13 Plan Explained
A Chapter 13 plan means how you repay the debt you owe. For example, if you are $10,000 in arrears on a car payment, you could prevent the car from being repossessed by a viable Chapter 13 case. The plan would repay the $10,000 arrearage debt on the vehicle over three or five years.
There would be some additional fees. Besides just the attorney fee, there is a trustee fee that accounts for a trustee who administers payments of the plan (a monthly payment of a determined amount). The trustee essentially is like a referee between creditors and the debtor and between creditors themselves, though disputes would be heard by a judge.
The trustee represents the interests of the creditors and is not a debtor's attorney in any regard, but works closely with debtor's counsel (like our firm) and creditors to try to fashion a workable plan that must then be approved by a judge at a Confirmation of Plan hearing.
Why Do Some People Fail Who Try to Represent Themselves?
Simply put, bankruptcy law is complicated. Our firm handled one case in which the applicable case law that determined how the judge would rule dated back to cases in 1866 and 1876.
The average person with debt issues cannot even fathom, much less attempt to address, complicated matters like this. Typically anyone who attempts to represent themselves has a badly put-together plan with tons of errors, and usually gets lectured by a judge that if they don't hire an attorney, their case will be dismissed shortly.
It is just like you wouldn't go to the doctor and attempt to treat yourself, you wouldn't try to do this on your own.
Especially in Chapter 13 cases experienced representation like from our firm is absolutely essential. We strive to help our clients through our detail-oriented approach.
Most cases we originate include person-to-person contact and doing whatever we need to do to best assist our clients to get the filing correct and seek great results.
How Does A Confirmation Of Plan Hearing Go? Isn't There Still A Meeting Of Creditors?
In a Chapter 13, you still have a meeting of creditors where you appear in front of a trustee but there's a second part to this — the Confirmation of Plan. That is where the judge approves the plan you have had us put together as far as repaying the creditors.
This is where you will likely especially need assistance because Chapter 13 plans can be very complicated as they must take into account all your debts and all your assets.
This doesn't mean someone is going to take your house or that you cannot keep it if you are behind; on the contrary, an approved plan usually means you will get to keep the house that you are behind in payments on (unless you want to let it go).
The confirmed plan just means that now, your automatic stay protects you from any creditor actions and they would have to seek permission of the court to be able to take action against you. Your job at that point is making sure you make your plan payments. If you successfully make all your plan payments, your debts will be discharged at the conclusion of the plan.
Choosing The Right Lawyer
At The Law Offices of Thomas Maronick Jr, we pride ourselves in our personal service and dedication to the needs of our clients.
No matter where you are located in the District of Maryland, we are here to assist you through these difficult waters by seeking to help you with the best option solution.
Sometimes we may advise that a bankruptcy, be it 7 or 13, is not in your best interest. Sometimes, you will not qualify for either.
But most people who come to us have generally had the same concerns and questions you have and have been unsure of what the best choice to pursue might be.
That is where we come in. We aren't just your law firm, your bankruptcy attorneys, but your counselors-at-law. We — the legal team of The Law Offices of Thomas Maronick Jr — will help you through providing the answers you need as well as the legal representation you need.
Our legal team includes experienced paralegals and legal assistants, who help our lawyers with your case. Our lawyers, especially Thomas Maronick Jr, are experienced in bankruptcy law and finding the best solution for you and one that will bring you the help you need.
As you can see, there is a lot that go into Chapter 13 cases. We offer a free consultation on all our bankruptcy matters. We are here to assist you whether you need a Chapter 7 or a Chapter 13 bankruptcy.
Contact Our Law Firm To Learn More
Contact one of our offices today so that we can better assess your needs as we seek to help you attain relief from debts.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.