Chapter 13 FAQ

Dixon & Johnston Answers Your FAQs about Chapter 13 Bankruptcy

The law office of Dixon & Johnston practices bankruptcy law from our office in Belleville, IL. We have done so for almost 40 years. Our team of attorneys is committed to resolving bankruptcy cases in ways that most benefit our clients. We understand the stress that financial burdens cause, and we know an inability to make payments only compounds that stress. Let us help you get out from under your debt and live a more comfortable life. We are here to help you guide you through the Chapter 13 bankruptcy process. Below are some of the frequently asked questions we receive at our Belleville, IL office.

What is Chapter 13 bankruptcy?

Chapter 13 bankruptcy is a type of bankruptcy that allows debtors to repay some or all of their debts under court supervision. By filing for Chapter 13 bankruptcy, a debtor can obtain relief from creditors by submitting a plan to pay all debts during a period of 36-60 months, in most circumstances. During the protected repayment plan period, creditors may not contact the debtors for payment and no penalties or interest can accrue. Upon completion of the Chapter 13 plan, a debtor is relieved of liability for the rest of his or her dischargeable debts. Chapter 13 is particularly useful in stopping foreclosure of your home and repossession of your vehicles. We can get you up to five years to get caught up on your mortgage. As soon as you file, the foreclosure stops.

How do Chapter 7 and Chapter 13 bankruptcy differ?

Chapter 13 involves a payment plan, although you frequently pay only a small percentage of the debt. Chapter 7 bankruptcy requires the debtor to relinquish nonexempt property and assets to settle debts. Most individuals who declare Chapter 13 bankruptcy retain their nonexempt property if they repay debts within the predetermined time frame. A Chapter 13 bankruptcy case usually lasts longer and is more costly than a Chapter 7 case. However, it is the preferred option for debtors who:

· Want to repay their debts and have the means to do so within a reasonable timeframe

· Have property they might lost in a Chapter 7

· Have significant debts that Chapter 13 can discharge but Chapter 7 cannot

· Are not eligible for Chapter 7 based on results of the means test, or because they filed a Chapter 7 witin the last 8 years

What is the means test?

The means test is a tool used to decide who is eligible for chapter 7 and chapter 13 bankruptcy. The income of the debtor for the 6 months before filing is averaged to determine if he is above or below the average median income. If above the median, the debtor normally has to file Chapter 13. Your bankruptcy lawyer at Dixon & Johnston can help you fill out the forms and submit them to a court when you file for Chapter 13 bankruptcy. The means test will also play a role in establishing a repayment schedule.

Who is eligible to file for Chapter 13 bankruptcy?

The skilled bankruptcy attorneys at Dixon & Johnston will adeptly guide clients through any options available in the face of declaring bankruptcy. If an individual deems it necessary to file for Chapter 13 bankruptcy, he or she must:

· Live in, do business in, or own property in the U.S.

· Have regular income

· Have unsecured debts totaling less than $419,275

· Have secured debts totaling less than $1,257,850

A married couple may jointly file for Chapter 13 bankruptcy. In this case, only one spouse must have regular income. This course of action is advantageous for married couples when both individuals have significant debts.

Must debtors pay all debts in full under a Chapter 13 plan?

No. Chapter 13 bankruptcy requires individuals to pay all debts that they can reasonably afford. As a result, many who file for Chapter 13 bankruptcy receive full or partial debt discharge. The Chapter 13 plan may necessitate more payment toward debts than others. Debts that Chapter 13 does not discharge include some long-term obligations, alimony or child support payments, certain taxes, most government-funded loans, debts from personal injury or death caused by driving under the influence of alcohol or drugs, and debts for criminal fines or restitution.

Contact Dixon & Johnston to Discuss Chapter 13 Bankruptcy

The highly-seasoned bankruptcy attorneys at Dixon & Johnston in Belleville, IL are experienced in Chapter 13 of the Bankruptcy Code. Let us help you determine the proper steps to take to resolve your outstanding debt. We will provide you with all the necessary information and help you file for Chapter 13 bankruptcy. We are committed to making the process as easy as possible and achieving the best outcome for you. Call us today.