Chapter 13 FAQs by Cutler & Associates, LTD.

Chapter 13 Bankruptcy in Chicagoland

Cutler & Associates, Ltd. skillfully handles Chapter 13 bankruptcy cases from our offices conveniently located throughout Chicagoland. Our expert bankruptcy attorneys are committed to providing compassionate legal counsel and helping our clients receive favorable outcomes for their cases. Since we opened our doors in 1990, bankruptcy law has been our specialty, and we understand the financial burdens individuals face daily. We are proud to serve as your partner while you climb out from under your debt to achieve financial stability. If you are uncertain whether chapter 13 bankruptcy is a viable option for you, contact our team today for a free bankruptcy evaluation. During the session, which should last about 45 minutes, we will explain the process, your options, and how it can be beneficial. Below are a few of the frequently asked questions we hear at our offices in and around Chicago, IL.

What is chapter 13 bankruptcy?

Chapter 13 bankruptcy permits debtors to repay a portion or all of their debts while under court supervision. When filing this type of bankruptcy, debtors submit a plan to repay all debts to creditors within 36-60 months, in most cases. Debtors obtain relief through this avenue because during the projected repayment plan period, creditors may not contact them for payment and neither interest nor penalties may accrue. Upon successful completion of the chapter 13 plan, the debtor is relieved of his or her liability for any remaining dischargeable debts.

How does chapter 13 bankruptcy differ from chapter 7?

Chapter 13 bankruptcy may be more appealing to some debtors because it allows them to use future income toward the payment of debts. Chapter 7 bankruptcy calls for the surrender of nonexempt property and assets to settle outstanding debts to creditors. The majority of those who declare chapter 13 bankruptcy keep their nonexempt property as long as they meet the conditional requirements of repaying their debts within the predetermined timeframe. Though a chapter 13 bankruptcy case typically lasts longer and costs more than a chapter 7 bankruptcy case, it is more beneficial for debtors who:

Wish to repay their debts and expect to have the means within a reasonable timeframe
Own property they do not want to relinquish
Have substantial debts that chapter 13 can discharge but chapter 7 cannot
Only need temporary relief while they sell assets to creditors
Are not eligible for chapter 7 bankruptcy due to the means test

What is the means test?

The means test is used to determine eligibility for chapter 7 and chapter 13 bankruptcy. It features components designed to reveal if debtors have disposable income available to pay their debts. The means test is based on Internal Revenue Service statistics in your community. If your or your household income is below the median income for your area, you will qualify for filing bankruptcy. If not, the government will review your income and expenses to determine eligibility. The bankruptcy attorneys at Cutler & Associates, Ltd. will help you fill out the necessary paperwork and submit them through the proper channels. The means test will also help establish the repayment schedule associated with your chapter 13 bankruptcy filing.

Who is eligible for chapter 13 bankruptcy?

Our experienced bankruptcy lawyers will present all options available to clients in Chicagoland who are considering declaring bankruptcy. If we collaboratively determine that filing chapter 13 bankruptcy is the best course of action, the debtor must meet certain requirements. He or she must:

Live in, do business in, or own property in the United States
Have a steady income
Have unsecured debts equaling less than $307,675
Have secured debts equaling less than $922,975
Not be a commodity broker or stockbroker
Have not intentionally dismissed a bankruptcy case in the previous 180 days
Have received a briefing from an accepted credit counseling agency in the last 180 days

Married couples may jointly file for chapter 13 bankruptcy. In such circumstances, it is only necessary for one spouse to have a regular income. Cutler & Associates, Ltd. often recommends chapter 13 bankruptcy for married couples if both parties have significant debts.

What happens upon filing chapter 13 bankruptcy?

As soon as one files for chapter 13 bankruptcy, an automatic stay comes into effect, serving as a court-ordered restraining order against creditors. Once this occurs, the debtor’s property and income cannot be seized. However, spousal and child support, pension loans, and tax debt can still be collected. Cutler & Associates, Ltd. will work with you immediately after filing chapter 13 bankruptcy to organize a repayment plan, which will be submitted to a bankruptcy judge or administrator. If approved, it will go into effect immediately. If the court does not initially approve the plan, it can be modified. Our bankruptcy attorneys will help you submit a plan that works, without having to convert to chapter 7 bankruptcy.

Must I pay all debts in full under a chapter 13 plan?

Debtors must pay all bankruptcy fees as well as priority and secured debts in full within the preapproved timeframe to satisfy the requirements of a chapter 13 bankruptcy filing. Secured debts include homes and cars as well as debt secured because of a tax lien. Priority debts include child and spousal support, most tax debts, and wages or salaries owed to employees. Additionally, student loans are often treated as a priority debt, meaning it is unlikely a bankruptcy court will discharge them. However, debtors may not have to pay all of their unsecured debts. What, if any, amount a debtor must pay toward this category depends on how much disposable income he or she has, the duration of the repayment plan, and the value that creditors could have expected through chapter 7 bankruptcy.

How can Cutler & Associates, Ltd. help?

Filing for chapter 13 bankruptcy is a complicated process, so it is prudent to seek the expertise of a firm like Cutler & Associates, Ltd. We have been helping individuals in Chicagoland get out of debt for nearly three decades and boast a thorough understanding of chapter 13 bankruptcy law. Our roles as legal counsel in such cases include:

Examination of a debtor’s financial outlook to determine whether a chapter 13 case is appropriate
Assistance obtaining the required pre-bankruptcy credit counseling course
Help preparing a budget
Development and implementation of methods for dealing with secured creditors
Creation of a chapter 13 plan
Preparation and filing of all necessary paperwork
Attendance at the meeting of creditors, confirmation hearing, and any other required hearings
Assistance ensuring chapter 13 plan is approved
Management of the claims filed and any objections to improper claims
Assistance overcoming any legal obstacles during the case
Obtainment of a discharge upon the plan’s completion

Contact Cutler & Associates Ltd. Today

Dealing with debt is a burdensome endeavor that can put a strain on all aspects of one’s life. However, help is available. If you need temporary relief without the threat of property loss, chapter 13 bankruptcy may be an appropriate option. The bankruptcy attorneys at Cutler & Associates Ltd. have been helping Chicagoland residents deal with their debts since 1990. We specialize in bankruptcy law, so we are sure to be able to help you manage your financial situation. Our team is happy to provide a free bankruptcy evaluation, outlining all of your options. Contact us today to begin your path toward financial freedom and stability.