Chapter 13 Bankruptcy is also known as the wage-earner plan. Essentially, when debtors file their voluntary petitions, they are saying “I have too many debts to pay all at once and I need to start a payment plan.” 

Moneylenders technically have the power to place debtors on payment plans, at least in most cases. But the proposed payment plan is almost never income-based. And, creditors can unilaterally initiate adverse action at any time.

So, bankruptcy is usually a much better option, especially if debtors know roughly what to expect when they file.

Filing the Petition

America’s first bankruptcy law only allowed involuntary bankruptcies. Today, almost all Chapter 13s begin with voluntary petitions. No one forces or pressures debtors to file bankruptcy. They can file when they want and withdraw their petitions when they want.

That being said, it’s important to complete the petition accurately. False information on a bankruptcy petition, even if the error was unintentional, is a serious offense. Additionally, the information in the petition often dictates the course of the bankruptcy.

Your home’s value is a good example. The Bankruptcy Code requires debtors to list the as-is cash value of all property listed on Schedule A. Typically, a “we buy ugly houses” home investor’s offer establishes a home’s as-is cash value. That offer could be pennies on the dollar.

Why does that matter? In Georgia, the homestead exemption is tied to the proportion of equity in the home. Lowering the home’s value effectively raises the exemption value.

On a related note, proper notice is sometimes an issue. Generally, the bank which originated the mortgage loan quickly hires another company to service the loan. Then, it is not long before Servicer A transfers the note to Servicer B, Servicer B transfers it to Servicer C, and so on.

Meeting of Creditors

About six weeks after debtors file their voluntary petitions, the trustee (person who oversees the bankruptcy for the judge) places the debtor on a payment plan, largely based on the income and expense information in Schedules I and J.

Once again, it is important to properly complete the paperwork. A few dollars here or there could make a big difference for your family. The protected repayment period lasts up to five years. Sixty months is a long time to make a monthly debt consolidation payment on top of other bills.

To calculate this debt consolidation payment, the trustee uses the information in Schedules I and J along with some ancillary documents, like income tax returns. Then, the trustee divides the received funds among secured creditors, like home mortgage lenders, and priority unsecured creditors, like attorneys. As long as the debtor makes the payment on time, bankruptcy’s Automatic Stay remains in effect. Creditors cannot take any adverse action without special permission from the bankruptcy judge.

Protected Repayment Period

The income and expense figures listed in the voluntary petition usually change after four or five months, let alone four or five years. Children go to college, jobs end, self-employment income dries up, and the list goes on. Legally, modifying the debt consolidation payment’s amount is usually not a problem. So, do not be afraid to speak up. Failure to quickly modify the payment amount could mean making two or three payments your family cannot really afford.

An Athens bankruptcy attorney can assist with this part of the process. A lawyer also represents you in other instances, such as motions for turnover, if they arise.

Endgame

When filers emerge from Chapter 13 bankruptcy, they often take the do-it-yourself approach. Many of these people wind up in bankruptcy court again. About a fifth of all bankruptcy petitions is repeat filings. In many cases, using the tools you have in your toolbox keeps you from going back to the bankruptcy court.

The exit-level debtor education class is a good example. All bankruptcy debtors must complete this class, and many choose quick online classes. But useful bankruptcy seminars are also available. Yes, they are often long and boring. But debtors often pick up a nugget or two that helps stabilize their finances going forward.

Additionally, many lenders work with people that have troubled credit histories. In fact, many lenders prefer to work with such individuals, because the bank can charge higher interest rates. So, the former bankruptcy debtor not only gets a needed loan. The bank reports on-time payments to credit bureaus, and the consumer’s credit score quickly improves.

The end result is often nothing short of life-changing. After eight or ten years pass, many former Chapter 13 debtors do not even remember they filed bankruptcy.

Conclusion 

Filing a Chapter 13 bankruptcy will reduce or even eliminate all your unsecured debt. This legal instrument can be utilized by individuals as well as businesses. For best results, however, debtors should consult a bankruptcy attorney who is experienced in handling Chapter 13 bankruptcies in Athens, Georgia. Only a reliable bankruptcy lawyer will guide you through the Chapter 13 bankruptcy process, while ensuring that your interests are adequately protected. You can also look forward to maximizing your benefits and legal rights under these bankruptcy laws.

Get Consultation from Professional Bankruptcy Lawyer in Athens, GA

If you’re an individual or a business who is looking for additional information on filing Chapter 13 bankruptcy, you’re in the right place. Our experienced Chapter 13 Bankruptcy attorneys in Athens will help you explore your legal options and learn about the bankruptcy process. Feel free to schedule a free initial consultation by calling us at (706) 843-2905.