Chapter 13 Bankruptcy

Why should I file a Chapter 13 bankruptcy?

A Chapter 13 bankruptcy allows you to pay your debts off over a period of 36 to 60 months, often at a substantially reduced amount. Usually the longer the length of the payment plan, the lower are your periodic payments. A Chapter 13 bankruptcy can be used to substantially reduce your unsecured debt (i.e. credit cards, medical bills, etc.) by up to 90%. Thus, if you owe $30,000.00 in credit card debt, you may only have to pay back $3,000.00, an average of $50 per month on that amount of debt in a 60 month plan. Come in and let us work up what would be your potential plan payment, absolutely FREE.

Why you may want to file with Arthur Ray Law Offices.

As a bankruptcy attorney in Memphis, Tennessee, I have been filing bankruptcies for well over 35 years. Most of our clients file a Chapter 13 bankruptcy with no fee charged upfront. My location is convenient to the residents of all of the counties that need to file a bankruptcy in Memphis. Those counties are Fayette, Tipton, Lauderdale and Shelby County. You can park your car only a few steps from our front door, which is on the first floor. We use the latest technology to keep you informed about your case and court dates. You can text us anytime you may have a question and get a quick response. You can also email and call us. We strive for and feel confident that we do a great job for our clients.

Reasons you may want to file a Chapter 13 bankruptcy:

Behind on car payment.

One of the most common reasons for filing a Chapter 13 bankruptcy is because you are behind on your car payments and you are afraid the finance company is coming to repossess your car. Perhaps your car has already been repossessed and you need to get it back. Many finance companies will demand that you pay the complete amount owed to get your car back after it has been taken or repossessed. So, if you can, file a Chapter 13 bankruptcy before they are able to get your car.

If you allow the finance company to keep the car, or if you turn it into the finance company, the finance company will usually sell it for less than it is worth and, after applying that amount to what you owe, go after you for the difference. Depending on how much you owe, this could run into thousands of dollars. Usually the finance company will sue you, get a judgment against you, and then likely garnish your wages. Thus, you may want to keep your car and file a Chapter 13 bankruptcy. Remember that if you file a Chapter 7 bankruptcy, you may not be able to keep the car.

If you file a Chapter 13 bankruptcy, you can usually be able to lower the car payment.

Behind on mortgage payments.

Usually, if you fall three months behind on your mortgage payments, your mortgage company will no longer take a payment from you and start foreclosure proceedings on your house. A Chapter 13 bankruptcy may let you spread the amount you are behind on your mortgage over the length of Chapter 13 bankruptcy plan and keep your house. Filing a Chapter 13 bankruptcy will normally stop a foreclosure, even if a sale date is already set. In my experience, once a foreclosure has been started, the mortgage company will not stop it, regardless of what the representative of the mortgage company may tell you about trying to work things out. Since most mortgage companies require you to be current on your monthly payments to keep your house in a Chapter 7 bankruptcy, a Chapter 13 bankruptcy may be the only way you can keep your house.

Behind on rent.

If you are behind on your rent and the landlord is threatening to evict you (put you out), you may want to file a Chapter 13 bankruptcy. Most of the time, landlords will work with you through the bankruptcy to help you continue renting from them as you pay back the past due rent in your bankruptcy. If you were to file a Chapter 7 bankruptcy and you are behind on your rent, you would probably be evicted from where you are living.

Have a title loan.

A Chapter 13 bankruptcy is a good way to get your car back from the title loan company, reduce the high interest rate, and pay off what you owe the title loan company over a period of up to 60 months.

Suspended driver’s license.

If your driver’s license has been suspended because you owe fines, tickets or child support to one of the courts in Memphis, a Chapter 13 bankruptcy may allow you to get your driver’s license back fairly quickly.

Behind on student loans.

A Chapter 13 bankruptcy might be the best option for you to file if you owe a significant amount on your student loans. Even though a student loan is usually not dischargeable in your Chapter 13 bankruptcy, it is an unsecured debt and you can pay as little as 10% of the amount of the loans, over up to a 60 month period, while you are under a Chapter 13 payment plan.

Behind on child support.

If someone is coming after you for ongoing or back child support, you may want to file a Chapter 13 bankruptcy. You can put your back child support in your Chapter 13 bankruptcy and pay it out over the length of your bankruptcy payment plan. Filing a Chapter 13 bankruptcy may keep you from being locked up for failure to pay your child support. Sometimes, we are able to work it out to put only a small percentage of your back child support to be paid through your Chapter 13 bankruptcy plan. Even though child support is usually not dischargeable, you can at least help your situation.

Have past due federal income tax.

If you owe the Internal Revenue Service back income tax, the IRS sometimes may seize your whole paycheck to pay back that debt. A Chapter 13 bankruptcy can help stop the IRS’s collection efforts and may let you pay your tax debt to the Internal Revenue Service in a much more affordable way.

No medical insurance or poor medical insurance coverage.

If you file a Chapter 7 bankruptcy and then you end up in the hospital, you could run up more debt than you eliminated in your Chapter 7 bankruptcy. You would have to wait 8 years from the time you filed your Chapter 7 bankruptcy (in which you received a discharge) before filing another one. If you file a Chapter 13 bankruptcy and something happens, you may still have a Chapter 7 bankruptcy available.

Other questions about a Chapter 13 bankruptcy:

How does Arthur Ray Law Offices get paid?

When filing a Chapter 13 bankruptcy (unlike a Chapter 7 bankruptcy), there is usually no up front attorney’s fee. The attorney’s fee is put in the Chapter 13 plan payment and usually paid out over up to 60 months.

How is the filing fee paid?

The filing fee is usually included in the Chapter 13 bankruptcy plan payments.

Do I have to pay my debt in full?

No, most of the time, you can pay a very small percentage of your unsecured debt. In fact, you may be able to discharge up to 90% of the same debt in a Chapter 13 bankruptcy that you could discharge in a Chapter 7 bankruptcy.

How will filing a Chapter 13 bankruptcy affect a co-signer?

Filing a Chapter 13 bankruptcy may stop legal action against a co-signer on a consumer debt if the co-signer is an individual and the debt is paid off in full under the Chapter 13 bankruptcy.

Will I lose my retirement?

One of the reasons you may want to file a Chapter 13 bankruptcy is to make sure you can keep your retirement benefits, if you are worried about your benefits being exempt.

What is a wage earner plan?

A Chapter 13 bankruptcy is sometimes referred to as a wage earner (since the payments are usually deducted from your paycheck). However, if you are worried about losing your job, you may be able to pay the Chapter 13 plan payments directly instead of the payments being deducted from your paycheck.

What is a bill consolidation?

A Chapter 13 bankruptcy is sometimes referred to as a bill consolidation since most all of your debt is paid in one payment directly to the Chapter 13 Trustee, who then pays a percentage of your debt to your creditors.

Of course, the above is only a simplification of the factors that go into choosing whether a Chapter 7 bankruptcy or a Chapter 13 bankruptcy is the best option for you and/or your spouse. Do not act on anything you read on this site without hiring an attorney. This is why we offer, for free, to prepare a bankruptcy petition for you to see what works best in your personal financial situation. We provide representation for individuals who live in Lauderdale, Tipton, Fayette and Shelby County, Tennessee, who qualify to file bankruptcy in the Bankruptcy Court for the Western District of Tennessee located in Memphis, Tennessee.

^*For those who qualify under federal law.