Chapter 13 Bankruptcy
Why Should I File a Chapter 13 Bankruptcy?
A Chapter 13 bankruptcy allows you to repay your debts over a period of 36 to 60 months, often at a significantly reduced amount. Generally, the longer the payment plan, the lower your monthly payments. Chapter 13 can reduce your unsecured debts — like credit cards and medical bills — by up to 90%. For example, if you owe $30,000 in credit card debt, you may only need to pay back $3,000, which averages about $50 per month over a 60-month plan. Visit us for a free consultation to estimate your potential plan payment — at no charge.
Why Choose Arthur Ray Law Offices for Chapter 13 Bankruptcy?
- Experience: With over 50 years of bankruptcy practice in Memphis, we have helped thousands of clients achieve financial relief.
- No Upfront Fees: Most Chapter 13 cases are filed with no upfront attorney’s fee — fees are built into your monthly plan payments.
- Convenient Location: Our office is easily accessible for residents of Fayette, Tipton, Lauderdale, and Shelby counties. Free parking is just steps from our first-floor entrance.
- Modern Communication: Reach us by text, email, or phone for quick, personalized responses throughout your case.
- Client-Focused Service: We are committed to excellent representation and support from your first call through your discharge.
Common Reasons to File Chapter 13 Bankruptcy
- Behind on Car Payments or Facing Repossession
- Chapter 13 can help you keep your car — even after repossession — by allowing you to catch up on missed payments and possibly lower your monthly payment.
- If you surrender your car, the lender may sell it for less than you owe and pursue you for the difference, often leading to lawsuits or wage garnishment. Chapter 13 can prevent this.
- Behind on Mortgage Payments or Facing Foreclosure
- Falling three months behind typically triggers foreclosure proceedings. Chapter 13 lets you spread out your arrears over the plan period, stopping foreclosure — even if a sale date is already set.
- Most mortgage companies require current payments to keep your home in Chapter 7, making Chapter 13 the only option for many homeowners.
- Behind on Rent or Facing Eviction
- Chapter 13 may help you stay in your home by allowing you to pay back overdue rent through your plan. Most landlords will work with you during bankruptcy.
- Title Loans
- Use Chapter 13 to recover your car from a title loan company, dramatically reduce high interest rates, and pay off the loan over up to 60 months.
- Suspended Driver’s License
- If your license is suspended due to unpaid fines, tickets, or child support, Chapter 13 may help you regain your driving privileges quickly.
- Student Loans
- While student loans are generally not dischargeable, Chapter 13 allows you to pay as little as 10% of the balance during your plan, providing temporary relief from aggressive collection.
- Child Support Arrears
- Chapter 13 lets you include back child support in your plan, preventing jail time for nonpayment and spreading out your repayment over the plan period.
- IRS Tax Debt
- If you owe back taxes, Chapter 13 can stop IRS wage garnishments and let you pay your tax debt affordably over time.
- Lack of Medical Insurance
- If you file Chapter 7 and later incur new medical debt, you cannot file again for eight years. Chapter 13 keeps Chapter 7 as an option for future needs.
The Chapter 13 Process in the Western District of Tennessee
Filing for bankruptcy can feel overwhelming, but understanding the local process in the Memphis bankruptcy court makes it much easier. Our attorneys will guide you through every step:
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Filing the Petition & The Automatic Stay
As soon as we file your case, the court issues an “Automatic Stay.” In Memphis, this immediately stops wage garnishments, vehicle repossessions, foreclosure sales, and harassing calls from creditors.
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Proposing Your Repayment Plan
We will help you create a realistic 3- to 5-year repayment plan based on your unique financial situation. This plan outlines how your debts will be consolidated and paid over time.
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The 341 Meeting of Creditors
About a month after filing, you will attend a brief hearing called the 341 Meeting of Creditors. You will meet with the Chapter 13 Trustee assigned to your case in the Western District of Tennessee. Our attorneys will be right by your side to prepare you and speak on your behalf.
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Plan Confirmation
A federal bankruptcy judge will review your proposed plan at a Confirmation Hearing. Once the judge approves the plan, you are officially on the path to financial recovery.
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Plan Feasibility: Can I Afford the Payments?
The bankruptcy court requires your repayment plan to be feasible — your monthly payment is calculated strictly on your disposable income: the money left over after paying essential living expenses like rent, groceries, and utilities. The Western District of Tennessee frequently uses Wage Deduction Orders, which allow your Chapter 13 payment to be automatically deducted from your paycheck, ensuring you never miss a payment.
Frequently Asked Questions About Chapter 13 Bankruptcy
How much does it cost to file Chapter 13 bankruptcy in Tennessee?
The total cost includes mandatory court filing fees and attorney fees. While attorney fees are regulated by the court in the Western District, the main advantage is that the majority of these costs can usually be rolled into your monthly repayment plan — no large upfront payment required.
What is the average Chapter 13 monthly payment?
Monthly payments vary depending on your specific financial situation. Your payment is calculated based on your disposable income, the value of your non-exempt assets, and any secured debts — like mortgage arrears or car loans — you are catching up on. The court ensures the plan is tailored to what you can actually afford.
Do I have to pay all my debts in full?
No. Most unsecured debts — like credit cards and medical bills — can be reduced by up to 90% through your Chapter 13 repayment plan.
How long does a Chapter 13 plan last?
Plans typically last 3 to 5 years, depending on your income and circumstances. Lower-income filers may qualify for a 3-year plan.
What are the downsides to filing Chapter 13 bankruptcy?
While Chapter 13 protects your assets, it requires a 3- to 5-year commitment to a repayment plan. It remains on your credit report for up to 7 years from the filing date, and you will have restricted access to new credit during your plan. Certain debts — like alimony, child support, and most student loans — cannot be discharged.
What are you not allowed to do while in Chapter 13?
During your repayment period, you cannot take on new debt, buy or sell significant property, or use credit cards without prior approval from the bankruptcy court or your Chapter 13 Trustee. You must also maintain your scheduled plan payments.
What is the 90-day rule for Chapter 13?
The 90-day rule refers to the “preference period.” If you repaid certain unsecured creditors — such as paying off a specific credit card or personal loan — within 90 days before filing, the bankruptcy trustee has the authority to recover those funds to ensure all creditors are treated fairly and equally under bankruptcy law.
How does filing affect a co-signer?
Chapter 13 may stop legal action against a co-signer if the shared debt is paid in full under your repayment plan.
Will I lose my retirement savings?
No. Chapter 13 protects your retirement benefits. Qualified retirement accounts are generally exempt from bankruptcy proceedings.
What is a Wage Deduction Order?
In many Chapter 13 cases in the Western District of Tennessee, the court issues a Wage Deduction Order. This allows your monthly plan payment to be automatically deducted from your paycheck, so you never miss a payment and creditors are paid on schedule.
What is bill consolidation in Chapter 13?
Chapter 13 consolidates most of your debts into a single monthly payment to the trustee, who then distributes funds to your creditors. This simplifies your finances and protects you from direct creditor collection during the plan.
Conclusion
Choosing between Chapter 7 and Chapter 13 bankruptcy is complex and depends on your unique situation. Understanding the Chapter 13 process helps set realistic expectations for financial recovery. Always consult a qualified bankruptcy attorney before making decisions. We offer a free, no-obligation consultation to prepare a bankruptcy petition tailored to your needs.
For more information about the differences between Chapter 13 and Chapter 7 Bankruptcy, click here.
Serving Lauderdale, Tipton, Fayette, and Shelby County, Tennessee. For more information or to schedule your free consultation about a Chapter 13 bankruptcy in Memphis, TN, call attorney Arthur Ray at (901) 475-8200.
Sincerely yours,
Arthur Ray
Arthur Ray Law Offices
We are a debt relief agency. Our Bankruptcy Lawyers in Memphis, TN help people file for bankruptcy under the bankruptcy code.
*For those who qualify under federal law.
Arthur Law Offices
