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Chapter 13
Chapter 13 is a bankruptcy for an individual, including one who is engaged in a business, who has a regular source of income and who desires to repay all or even a small percentage of her debts pursuant to a plan, which she has the exclusive right to propose.
A bankruptcy case under Chapter 13 is very different from Chapter 7 liquidation, inasmuch as someone filing under Chapter 13 remains in possession of her property and continues to make payments to her creditors at what is generally a reduced rate.
To file for bankruptcy under Chapter 13, you must meet certain eligibility requirements.
Specific Dollar Limitations under Chapter 13Chapter 13 relief is available to an individual:
Co-Debtor StayOne of the unique features of a Chapter 13 bankruptcy in an Elmira case is that the automatic stay applies not just to the debtor but also to creditors of non-filing co-debtors of the debtor.
Debts Incurred by Fraud or False PretensesChapter 13 can allow you to discharge debts that were incurred fraudulently and also marital equalization obligations. You may be able to pay off child support arrears in your bankruptcy plan at the expense of the unsecured creditors.
The Chapter 13 Plan
Only the debtor may file a Chapter 13 plan. The plans that we prepare as Elmira bankruptcy lawyers always include all mandatory provisions required by bankruptcy laws to meet confirmation requirements. To insure that our plans meet chapter 13 confirmation requirements, we scrutinize all applicable established tests prior to submitting your case to the bankruptcy court Our bankruptcy plans are also tailored to our clients needs for financial rehabilitation and the vesting of the debtors property in the debtor rather than the creditors.
Preferential Treatment to Certain Creditors
The confirmation of a Chapter 13 Plan generally requires that all unsecured creditors receive the same percentage called for in debtors plan. However there are exceptions to this rule where it is necessary to the clients effective debt rehabilitation. For example, a client in business might need to maintain credit with a lender in order to continue to operate the business. Our Elmira Attorney's office takes all necessary steps to approve full repayment to that creditor where it benefits the chapter 13 plan.
Stopping Foreclosure under Chapter 13
Chapter 13 is very different from Chapter 7 in that it allows for long term affirmative orders that reinstate your rights in defaulted mortgage obligations. The lawyers of our Elmira Bankruptcy Center will move quickly in the courts to reinstate your mortgage, provide for adequate protection to the creditor, take care of real property issues involving lien avoidance, and bifurcate multiple mortgages where appropriate.
Chapter 13 "cram down" of automobile and truck loans.
Bankruptcy generally allows for the client to pay on their automobile only as much as the car is worth, not the full amount owed on it. The new legislation enacted in 2005 creates some significant changes to this rule. An attorney representing a Chapter 13 client in New York now needs to be on top of these changes and developing exceptions to these changes. Attorney Andersen has been one of the attorneys at the forefront of this developing area of law.
Eliminating Second Mortgages under Chapter 13
Generally, a chapter 13 debtor will continue to pay on long term mortgages on her home, outside of the plan as normal, with only unpaid arrearages inside of the chapter 13 plan. There are certain circumstances where a second mortgage can be eliminated if it attaches to only "nominal equity" in a clients homestead. A lawyer in New York representing a Chapter 13 Bankruptcy debtor must be fully familiar with this rule of law.
Duration of Plan
The payments under a Chapter 13 bankruptcy plan may not extend beyond three years unless, for cause, the court approves a longer payback period, up to a maximum of five years.
Confirmation of the 13 Plan
After proper notice, the court conducts a hearing to determine whether a proposed plan satisfies the elements necessary for confirmation. The plan must comply with the provisions of Chapter 13, as well as all the other applicable provisions of the Code.
Chapter 13 plans proposing little or no debt repayment
The size of the bankruptcy debtor's payment to the unsecured creditors is not, in and of itself, determinative of whether the plan was proposed in good faith, since the Code provides a best efforts requirement for application of the debtor's expected disposable income over a period of three years.
Commencement of Payments
The debtor's payments under a proposed plan must begin within thirty days after the plan is filed, unless the court rules otherwise. Any payment made before confirmation of a plan must be held by the trustee until the confirmation hearing. If the plan is confirmed, then the trustee makes distribution as provided for by the plan, However, if confirmation is denied, the money must be returned to the debtor, less any unpaid administrative expenses that have been allowed.
Distribution: Ordinarily, the payments under a confirmed plan are sent to creditors by the trustee unless the plan or the confirmation order provides otherwise, such as where a debtor engaged in business is allowed to perform this function.
Effects of Confirmation
A confirmed plan binds the debtor and every creditor, regardless of whether a creditor has accepted or rejected the plan or has objected to confirmation of the plan, or whether his claim is provided for by the plan. Unless the Chapter 13 plan or the confirmation order provides otherwise, confirmation causes all property of the estate to vest in the debtor "free and clear of any claim or interest of any creditor provided for by the plan."
Chapter 13 Discharge
The debtor will be granted a discharge under Chapter 13 after she has made all payments under the plan unless, subsequent to the order for relief, she has executed a court-approved written waiver of discharge.
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