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Irving S. Bergrin LPA Co
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Cleveland Chapter 13 Bankruptcy Attorney

Definition of Chapter 13

A Chapter 13 bankruptcy enables individuals with a steady income to negotiate a plan to repay all or part of their debt. Under this chapter, debtors propose a month-to-month repayment plan to creditors over a period of three to five years. The debtor’s monthly income will usually decide the duration of the repayment plan, but in no case may a repayment plan be longer than five years.

The nature of Chapter 13- Debt reorganization

Depending on your situation, a Chapter 13 bankruptcy may offer a number of benefits not available through liquidation under Chapter 7. For many people, Chapter 13 offered an opportunity to save their homes from foreclosure. This chapter provides the opportunity to stop foreclosure proceedings and cure overdue mortgage payments over time. Another advantage of Chapter 13 is that it allows individuals to reschedule their secured debts and pay them back over the duration of their repayment plan. Doing this may lower the payments. Chapter 13 also acts like a consolidation loan. This means that individuals will make the plan payments to a chapter 13 trustee, who will then distribute the money to the creditors. It simplifies the process, and the debtor will have no direct contact with the creditors. Finally, chapter 13 could also allow you to reduce your debt before establishing a repayment plan.

Chapter 13 eligibility

Any individual, even if your self employed, is eligible for chapter 13 relief as long as the individual’s unsecured and secured debts do not pass the federal limit. A corporation or partnership may not be qualified as a chapter 13 debtor.

Lastly, filing for bankruptcy is not a simple task. Bankruptcy forms are complicated and require great attention. The forms contain complex questions about your financial affairs, and are more similar to tricky tax returns than straight forward check the box forms. An experienced bankruptcy attorney can help you fill out the forms correctly, and help you avoid grave errors that could cost you both money and property

However, there are limitations to when an individual can file under Chapter 13. If, during the prior 180 days, a recent bankruptcy petition was dismissed due to the debtor’s willful failure to comply with orders of the court, or was voluntarily dismissed after creditors sought relief from the court to recover property upon which they held claims. Also, a debtor cannot file under any chapter of bankruptcy unless they have received credit counseling from an approved credit agency within 180 days before filing. If a debt management plan has been developed during the credit counseling, individuals must file it with the court. There have been exceptions, in emergency situations, where bankruptcy administrators have determined that there are no sufficient approved agencies to provide the necessary counseling.

The Chapter 13 discharge

A Chapter 13 debtor is entitled to a discharge at the end of the repayment plan as long as they fulfill all of their bankruptcy requirements. The discharge relieves the debtor of all legal obligations towards debts provided by the plan, with limited exceptions. Creditors can no longer initiate or continue any action against the debtor to collect the discharged obligations. The debts dischargeable in Chapter 13 are a bit broader than in Chapter 7 cases; they include debts for wilful injury to property, debts acquired to pay nondischargeable tax obligations, and debts arising from divorce property settlements.

Debts not dischargeable by the bankruptcy include, but are not limited to: debts for domestic obligations, student loans, certain taxes, and debts for restitution or criminal fine included in the debtor’s criminal sentence

Benefits of having an attorney when filing a ch. 13 petition

It is important to remember that filing bankruptcy is not simple, and Chapter 13 can be a timely process. The process itself is full of legal intricacies that must be carefully considered in order to make the best of your financial situation. The consequences, for failing to follow the bankruptcy process correctly, can diminish your already limited resources and lead to a greater loss of assets. Attorney Irving Bergrin will take the time to discuss your legal options, and help you make an informed decision about what is right for your specific financial situation. Reach success in your bankruptcy process, with an experienced lawyer on your side, every step of the way. Call today for a free consultation.

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