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Contact David Lutz directly for fast answers to your Bankruptcy Law Questions at the Office at (248) 624-5500, on his cell phone at (248) 535-2520, or by email at david@ambroselawgroup.com.
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| CHAPTER 13 |
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A Chapter 13 Bankruptcy stops collection efforts as soon as you file your petition. The most popular reason for filing Chapter 13 is that people want to keep their homes and other property. This process could allow you to pay back a small percent on your unsecured debt over a 3 to 5 year period, depending on your economic situation.
CLICK FOR “WHAT NOT TO DO BEFORE BANKRUPTCY”
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ADVANTAGES OF A CHAPTER 13 BANKRUPTCY |
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- Stops a foreclosure or sheriff’s sale of your home
- Stop Repossession of your car or get your car back after repossession.
- Stops interest and taxes from accruing on your mortgage
- Stops interest from accruing on credit card debt while you pay it off.
- Forces creditors to accept a payment plan agreed to by the court.
- Can eliminate 2nd and 3rd Mortgages.
- Future creditors will at least see that you have made consistent payments over a period of years.
- You will usually make one payment once a month.
- The amount owed each month will be clear.
- Gives you peace of mind knowing you are back in control of your financial future.
- Allows you and your family to keep your home and other property.
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YOU CAN FINALLY PAY OFF A DEBT WITHOUT INTEREST
KNOCKING YOU BACK DOWN EACH MONTH! |
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CAN I KEEP PAYING CERTAIN CREDITORS? |
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It’s understandable that you want to pay off friends or family that you owe money to. This may be seen as a preference by the trustee, the person who collects your money and assets from you to pay off your creditors. If you made a payment towards a debt before you file for bankruptcy, be sure to speak with an attorney about the consequences and who it will affect. Here is a non-exclusive list of factors to consider: |
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What is a preference? |
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A preference may occur when you make payment towards a previous debt to certain creditors shortly before you file bankruptcy and while you are insolvent. The law is designed so that all of the creditors can be paid from your (the debtor’s) payment plan. A preference is deemed to be unfair, since your brother or your favorite creditor is the only one getting paid. The usual time period that we look back to is 90 days. In other words, if you paid your brother back the $1,000 you owe him a month before filing, the payment will probably qualify as a preference.
THE INSIDER- If the person you paid is considered an insider, then the trustee can look back at the last full year to see who you might have paid. In the above example, you could have paid your brother 9 months ago and it could qualify as a preference. An insider could be a family member, relative, or corporate officers. |
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What happens if it is a preference? |
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If the payment you made is before filing bankruptcy is considered a preference, the trustee can recover that payment from the creditor you paid. This even applies to your family members. The trustee must show in these insider preferences cases that you were insolvent when you made the payment. Generally, it’s harder for the trustee to recover payments from insiders than from regular creditors. Your attorney can explain more on your situation.
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THE CASE |
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Meeting of Creditors |
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The first time you will be in a formal setting will be at the “341 Meeting of Creditors”. The trustee places the debtor under oath and asks you some questions. Any creditor can choose to be present and also ask any questions. Judges are not present. This is the time for creditors or the trustee to either agree to a payment plan or to discuss why the plan might not work. No Judge is present, and the setting is a hearing room, rather than a courtroom. |
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Pre-Confirmation/ Confirmation Hearing |
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The proposed plan is discussed again at length, this time before a Bankruptcy Judge. The plan can then be confirmed, altered, or denied, and payments continue according to the ordered specifications. |
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NOTE: YOU WILL BE MAKING PAYMENTS AS SOON AS YOU FILE YOUR PETITION, EVEN THOUGH YOUR PLAN MIGHT CHANGE. |
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