Chapter 13 Bankruptcy Lawyer in Tacoma, WA
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A Chapter 13 is a type of bankruptcy that allows you to consolidate all your debt into a payment plan that lasts between three and five years. Unlike non-bankruptcy consolidation plans, a Chapter 13 allows you to include all your debt – back mortgage payments, car loans, taxes, back child support, tickets, etc. It also ends with a discharge that no creditor can argue with down the line. As long as all your creditors get notice of the bankruptcy, they must go along with it in bankruptcy court.
A Chapter 13 starts by filing a petition and other related documents. The documents detail your income, your budget, your property and your debts. You also propose a plan to repay your creditors. A trustee is appointed. The trustee collects a monthly payment from you and pays your creditors according to the plan. Any creditor or the trustee can object to your plan. The final decision to “confirm” or approve your plan is with the bankruptcy judge. Most objections can be worked out with creditors or the trustee out of court but sometimes confirmation has to be decided at a hearing before the bankruptcy judge. You do not have to attend these hearings unless it involves some testimony, which is rare.
You do have to attend one hearing a month after you filed called a “meeting of creditors.” Usually the only people who attend this hearing are the trustee, you and your Tacoma Chapter 13 bankruptcy attorney. The trustee takes sworn testimony from you to verify that your documents are true, accurate and complete. At the hearing, the trustee may give some feedback about what the plan needs to be confirmed. Most often you need to go along with the trustee but in some cases your attorney will argue your side in bankruptcy court. Creditors usually do not appear at this “meeting of creditors”. Most often they express their opinion directly to your attorney or file an objection in bankruptcy court.
Filing a Chapter 13 bankruptcy in Tacoma, WA can stop your home foreclosure.
A Chapter 13 is a way of stopping a foreclosure and paying back mortgage arrears over five years. Unlike a Chapter 7, it gives you a long term solution to foreclosure. As long as you are current with your plan payments, the plan complies with the law and the plan catches up on the mortgage in five years, the mortgage company must go along with the bankruptcy.
Keep your car in a Chapter 13 bankruptcy.
You can consolidate a car loan in Chapter 13 too. If you purchased your car over two and a half years ago, you can “cram down” the loan. That means you pay the value of the car as “secured”. You pay the secured part at a lower rate of interest. Any loan balance over the value of the car is “unsecured”, which is paid at 0% to 100% depending on what the plan pays other unsecured creditors. You can cram down refinanced loans and loans that rolled over “negative equity” from another car trade in.
The amount you pay unsecured creditors, such as credit cards, pay day loans, signature loans and medical bills, depends on your ability to pay. This is determined by a means test. The means test takes an average of your past six months of income and deducts expenses from it. After deducting the means test expenses, which includes secured debt, you are left with a monthly payment of unsecured creditors.
If it shows $300 per month, you pay $18,000 over five years. If you have $50,000 total unsecured debt, you pay 36%. You can also choose to pay unsecured creditors enough to cover what a Chapter 7 would have paid them from liquidation of property. So, if you inherited a $60,000 share of a family vacation home and didn’t have enough exemptions in Chapter 7 to cover it, you could pay $1,000 per month to unsecured creditors in a Chapter 13 instead. Any dischargeable debt you do not pay in a Chapter 13 is wiped out. Some debt can not be discharged, such as student loans, some back taxes, back child support and fines. Back taxes and child support must be paid in full in a Chapter 13. In some cases, people exit Chapter 13 still owing fines and student loans.
Call for a free consultation today with a Tacoma Chapter 13 bankruptcy attorney from our team!
Do you have questions and would like help in determining which form of bankruptcy may be right for you? Please call our law offices to set up your free consultation with a Chapter 13 bankruptcy lawyer in Tacoma, WA today! Be sure to learn more about the affordable low flat fees and the flexible payment plans we offer all of our clients.
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Start your financial recovery today! Contact an experienced Chapter 13 bankruptcy lawyer in Tacoma, WA from our firm today: (253) 778-6952