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  • Responsibilities when filing bankruptcy under Chapter 13

    Responsibilities when filing bankruptcy under Chapter 13

    Chapter 13 filing forms are pretty similar to the forms used for Chapter 7. The information and objectives are the same in both cases. This procedure includes detail of income, assets or properties, expenses, and debts. Along with this information, you shall also provide for a plan that shall manage all the debts in the future 3-5 years. Along with these information pieces, you also need to enclose your latest federal and state tax returns. There has to be proof for income tax filing for the last 4 years. You also have to avail a certificate for credit counseling that has been issued from a United States Trustee approved organization. To know more about Chapter 7 bankruptcy or guidance about anything relating bankruptcy, log on to Recovery Law Group to clarify all your questions and doubts.

    The payments usually monthly are made to the bankruptcy trustee who later distributes the same as decided to the lenders. The bankruptcy trustee collects a commission for the tasks he/she performs. In order to initiate the release of debt under Chapter 13, you have to follow the payment plan for the specified period.

    What will I have to pay?

    The common question with respect to Chapter 13 is what type of debts will be paid and in what proportion. By addressing this question one can easily determine the net liability one may have to bear in the case of Chapter 13 bankruptcy.

    • Administrative fee

    This type of fee includes the filing fee, trustee commissions that could be 3% and as high as 10% on the monthly payment, and attorney fees. While attorney fee depends on whether you hire an attorney or not, even though it is highly recommended, filing fee and commissions have to be paid out without choice. These debts or fees have to be paid off in full.

    • Priority debts

    Similar to administrative fees, these debts are also essential and need to be paid in full meaning 100% without any rebate or discharge. This includes debt like alimony, child support, tax debts may be state or federal, money owed to employees, contributions pending for employee benefit fund, etc.

    • Secured Debts

    All sorts of secured debts home mortgage, auto loans, jewelry loans, etc., need to be paid off in full in order to retain the asset gauged as collateral. There can be a small possibility, where you could get a marginal rebate on paying off debt for secured assets.

    • Unsecured Debts

    These kinds of debts usually include credit card, utility bills, medical bills, membership of some clubs, payday loans, etc. These debts have high-interest rates and are not secured by any asset, lien or any other guarantee. The payout to these debts is the last priority. Depending on the disposable income and the amount of income available after allocating the same to the priority debts, the percentage of monthly payments under Chapter 13 could vary between 0 to 100%.

    Things to note

    There are different ways of calculating disposable income and practical tenure of repayment. To find the most beneficial and appropriate one that could be approved easily by the bankruptcy court without too much intervention, it is best advised to consult an experienced attorney. There are different ways of how an unsecured debt can be converted into a secured one. For instance, if you used a credit card for purchasing a luxury item recently, the credit card company might want to prove your intentions of fraud and might want to convert the debt related to fraud. This will turn the debt liability to 100% which could have been 0%.

    Similarly, there are secured credit cards, and various other lending traps, which many people discover only after filing bankruptcy. Seeking assistance is essential to making a well-informed decision. Dial in 888-297-6203 for best solutions.


      *Are you more than 60 days past due on your mortgage?

      *Do you own a home?

      Are you currently working?

      By clicking “Submit”, whether I do or do not purchase any products or services on this website, I hereby give my express written consent to receive calls and SMS/text messages, including calls and SMS/text messages made and sent using automated dialing equipment and/or pre-recorded or artificial voice technology and email, about offers and deals that I wish to be kept informed about from (“Partners”), at the phone number and/or email address provided on this form, including any wireless numbers provided, even if I have previously registered the provided number on any Do Not Call Registry. If I do not make a purchase on this website, it is expressly understood that the Partners retain permission to contact me as specified earlier in this paragraph. Carrier SMS/MMS and data messaging rates apply. I also agree that by clicking “Submit” that I agree to the Privacy Policy and Terms and Conditions.

    • Read the Fine Print on Credit Cards and Avoid Going Bankrupt!

      Read the Fine Print on Credit Cards and Avoid Going Bankrupt!

      Often people take debts to meet their financial requirements. These debts can be either secured ones (where a property is kept as collateral) such as a home loan or car loans; or unsecured like credit cards, etc. Since most credit card debts do not have any property which can be claimed in case you don’t pay, they can be discharged during bankruptcy. However, sometimes, some fine print on the card can make them secured without you having any knowledge of this. In such cases, these debts will not be discharged during bankruptcy. It is therefore important to be aware of any such development prior to a bankruptcy filing.

      Credit cards and bankruptcy

      While using a credit card you agree to all terms which come with the agreement specifying how to use the card, how to pay for it, the interest rate you will be paying etc. Since the agreement is worded with extensive legal terms many people skip going through it, focusing only on how much you have to pay and what interest you will be paying. Since credit card companies also realize that people skip over the terms and conditions, they have started incorporating clauses which can affect your rights. Sometimes, clauses which give credit card companies the permission to seize property which you purchased using the credit card in case of failure to pay, might be incorporated. With the integration of such clauses the loan converts from an unsecured one to a secured one.

      Incorporation of clauses similar to the one stated above can make a huge difference in the way your credit card loans are seen. Unpaid credit card loans may result in repossession of your property which was not possible in earlier cases. As per the standard agreement, in case a person defaults on credit card payments, the company can either negotiate for payments or sue you to get them. But, with the clause, any item you purchase using the credit card can turn into collateral on non-payment of dues!

      Generally secured loans can be determined easily, like a car loan or a house mortgage loan as it is specified that the lender will take possession of the property on non-payment of dues. However, this is not expected from credit card companies. Lawyers of Dallas based bankruptcy law firm Recovery Law Group inform that the threat of repossession is not the only issue at hand in such case. During bankruptcy, secured and unsecured debts are treated differently, with the latter being wiped out after bankruptcy. The secured debts, however, are treated differently. You either have to give up the property to pay the dues or agree to a repayment plan if you wish to keep the property. Chapter 7 is the preferred way to wipe out unsecured debts while if you wish to retain the property linked to secure debts, Chapter 13 should be your choice. It is therefore important to know more about your credit card debts before filing for bankruptcy.

      Does your credit card come with a fine print clause?

      Many credit card companies are securing their card loans with the items purchased by the cardholders. Despite the practice becoming unpopular in the 1990s, credit card companies continue with the practice. Since most people do not go through the entire agreement with their credit card company, they also might end up losing any purchases made using their credit card, if they are unable to pay for them.

      Many times, the time and money involved in repossessing your purchases made with the card is too much for the credit card company to pursue. However, it can be used as a threat (which can be followed through) so that you make payments towards them. In case you have used the credit card to make a big purchase, the company might get it repossessed. It is important in such a situation to bear in mind of your rights. As per California Commercial Code Section 9609, a creditor can collect collateral without breaching the peace, i.e. people who come to repossess your property cannot enter your home without permission. In case you deny it, the only recourse available is through the court.

      Whether a credit card company goes to the court depends on the cost of the item purchased. It is not worth spending time and money if the purchase is of a small amount. Consumer Financial Protection Bureau organizes a database of card agreements which can be consulted to find out if your credit card contract has a similar provision. You could also consult expert bankruptcy lawyers at 888-297-6203 to find out more about your options. However, the best way to avoid such a situation is to not take such a credit card. Before getting a new credit, do complete research about the company and their policies. It makes no sense to get a credit card which has difficult terms and conditions attached to it. In case you already have such a card, the best option will be to pay off the dues and close it at the earliest.


        *Are you more than 60 days past due on your mortgage?

        *Do you own a home?

        Are you currently working?

        By clicking “Submit”, whether I do or do not purchase any products or services on this website, I hereby give my express written consent to receive calls and SMS/text messages, including calls and SMS/text messages made and sent using automated dialing equipment and/or pre-recorded or artificial voice technology and email, about offers and deals that I wish to be kept informed about from (“Partners”), at the phone number and/or email address provided on this form, including any wireless numbers provided, even if I have previously registered the provided number on any Do Not Call Registry. If I do not make a purchase on this website, it is expressly understood that the Partners retain permission to contact me as specified earlier in this paragraph. Carrier SMS/MMS and data messaging rates apply. I also agree that by clicking “Submit” that I agree to the Privacy Policy and Terms and Conditions.