Chapter 13 Bankruptcy Attorneys in Nashville

Ideal Candidates for Chapter 13 Bankruptcy

Those best served by Chapter 13 are usually people with a regular income who face overwhelming debt but wish to avoid the complete liquidation of assets associated with Chapter 7. Specifically, Chapter 13 is well-suited if you have significant equity in a home or other property you wish to protect, as it allows you to reorganize your debt and maintain ownership. Moreover, if you are behind on vehicle payments but can catch up through a structured plan, you will also find Chapter 13 advantageous. 

Your Creditors Under Chapter 13

After filing Chapter 13, creditors cannot call you at home or work. They cannot send you letters, sue you, garnish your wages, or seize your property. They must direct all contact with you through your attorney’s office. 

Even if you are already being garnished or a judgment has been entered against you, it is essential to know that:

• Chapter 13 stops garnishments 
• Chapter 13 stops foreclosures and repossessions 
• The IRS can be paid through Chapter 13
• It is possible to substantially lower payments on cars or furniture

How Chapter 13 Works

Chapter 13 puts all your bills into one bill, like a consolidation loan. This is withheld from your paycheck (like your federal taxes) and is then sent to the Chapter 13 Trustee’s office by your employer. Once per month, the Trustee collects the money and sends it to your creditors.

Typically secured debts like your home, car, and furniture bills get paid first by the Trustee as well as other priority debts like taxes and child support. After these secured and priority debts, money is sent to your unsecured creditors. 

You have up to five years to pay your Chapter 13 plan. While the unsecured creditors are waiting to be paid, they cannot charge you late charges, penalties, or interest. Unsecured creditors may only get a small percentage of what they are owed. 

If you complete your Chapter 13 plan, the balance of what you did not pay is discharged or wiped out. If you have a co-signer on your loans, we can advise you on what happens with them in a Chapter 13 plan.

Employees & Others

You must pay your bankruptcy through a payroll deduction if you are employed. This is not a garnishment, and you cannot be fired or discriminated against by your employer for filing Chapter 13. 

Most employers know Chapter 13 and realize it is a federal law. While it is a little more work for payroll, it stops you from being harassed by debt collectors. You do not need to have a regular job to file Chapter 13. You can be self-employed or have income from Social Security, disability, retirement, or other government assistance. The only requirement is that you have a regular source of income.

Mortgage Payments

Homeowners often ask us if Chapter 13 will lower their mortgage payments. The answer is no. The regular mortgage payment stays the same. However, you can catch up on back payments over two years.

For example, if your mortgage payment is $500.00 per month and you are three months behind ($1,500.00), you must still pay the regular mortgage payment of $500.00 per month and add about $65.00 extra each month to catch up on the arrears.

Key Benefit

One of the critical benefits of selecting Chapter 13 bankruptcy is the increased likelihood of retaining your property. Unlike Chapter 7, where property might be sold to satisfy debts, Chapter 13 typically involves restructuring debt to avoid forfeiture of assets. 

However, maintaining ownership is contingent on adherence to the payment plan established by the court. Flexer Law ensures that the plan is realistic based on your financial situation so that you can maintain possession of your assets, from your home to personal belongings.