Navigating Chapter 13 to Save Your Car and Eliminate Unsecured Debt

Are you looking into Chapter 13 bankruptcy and unsecured debt for your financial situation? If so, here is a breakdown of what Chapter 13 entails and how it can help you pay off debt.

Chapter 13 bankruptcy and unsecured debt are two things that may come up if you are facing the reality of having to declare bankruptcy. If you find yourself in a financial position where this is necessary, you will need to understand what your options are and which one will have the most advantages.

Are you wondering what happens to unsecured debt if Chapter 13 is dismissed or if you are eligible for Chapter 13 bankruptcy? If so, check out this article, where we will be discussing what Chapter 13 is and how Ohio residents can use it.

What is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy, also called the wage earners plan, allows those with a regular disposable income to use a plan to pay off their debt. This applies to both individuals and married couples who want to either pay off all of their debt or at least a substantial portion of it. This is different from Chapter 7 bankruptcy, which requires debtors to liquidate the majority of their assets to pay off their debt.

Chapter 13 bankruptcy allows you to develop a repayment plan between three and five years that is realistic for your income. During the extent of your Chapter 13 bankruptcy, creditors cannot make any collection efforts, such as sending collection notices for closing, repossessing property, or filing a collection lawsuit. You will also retain possession of any indebted property as long as you make payments that are in line with your repayment plan.

Chapter 13 bankruptcy for unsecured debt is often a lifeline for Miami County residents who may be facing car repossession. Chapter 13 allows you to create a repayment plan and catch up on payments without the risk of having your vehicle taken away during this process.

Types of Chapter 13 Repayment Plans

Depending on the type of debt you have, you will need to create a specific repayment plan, which can fall into one of these three categories.

  • Priority debts: Priority debts have to be paid off during your repayment plan and they can include things such as back taxes, child support, and spousal support.
  • Secured debt: Secured debts usually have to be paid back in full and include things such as car loans or home mortgages.
  • Unsecured debt: Unsecured debt in Chapter 13 isn’t usually paid in full by the end of your repayment plan, as the court will usually discharge or avoid any outstanding balances. Unsecured debt can include things like personal loans, medical bills, and credit cards.

Chapter 13 Eligibility

There are certain things you will need to know to qualify for Chapter 13 bankruptcy, such as the Chapter 13 bankruptcy unsecured debt limits. The good news is that there aren’t too many eligibility requirements for Ohio residents to qualify for Chapter 13:

  • Have a steady income.
  • You haven’t filed for Chapter 13 for two years or Chapter 7 for four years.
  • Be up-to-date with your tax filings.
  • Secured debt under $1,257,850.

The unsecured debt limit in Chapter 13 is also a requirement, requiring that your unsecured debt is not over $419,275. What happens to unsecured debt in Chapter 13 will depend on how much you pay off. Some of this debt will be included in your repayment plan and any remaining debt will usually be discharged.

Before you proceed with Chapter 13 bankruptcy and unsecured debt, you need to hire a bankruptcy attorney who can help you with this process. They will assess your financial situation, handle negotiations with creditors when creating a realistic repayment plan, and help you prepare your bankruptcy petition. Overall, a bankruptcy lawyer will help you every step of the process, ensuring everything is done correctly and thoroughly, giving you the best chances of success.

Advantages of Chapter 13 Bankruptcy

There are many advantages to using Chapter 13 bankruptcy if you are in a difficult financial position. Here are some examples of why this may be a good option for you:

  • Extended debt terms: Chapter 13 allows you to extend repayment periods for some types of debt that may be due before the end of your repayment plan.
  • Less impact on your credit report: Unlike Chapter 7 bankruptcy which remains on your credit report for 10 years, Chapter 13 bankruptcy is removed after seven years.
  • Avoiding debt collection: When you are approved for Chapter 13 bankruptcy, a stay is put on your creditors, preventing them from collecting your debt. This allows you to keep debted property, such as a home or car, as you are following your repayment plan.
  • Unsecured debt relief: In most cases, any unsecured debt balances remaining after your Chapter 13 repayment plan will be discharged. Unsecured debt in Chapter 13 usually includes things like credit cards and medical bills but you will still remain responsible for student loan balances after your repayment plan.
  • Versatile repayment plans: With Chapter 13 bankruptcy, you are able to create a repayment plan that is realistic for your debt and income. There are also various payment plan options that can help you prioritize certain types of debt.
  • Cheaper filing: Chapter 13 has extensive fees but these are not upfront costs. Because of this, it is more affordable to file Chapter 13 bankruptcy initially than it is to file Chapter 7 bankruptcy.

If your Chapter 13 petition is not approved, you will need to find a different option for your financial situation. If Chapter 13 is dismissed, your unsecured debt will remain as it was and the automatic stay for your creditors will no longer be in effect. This means that your creditors can take collection actions, such as using wage garnishments, repossession, foreclosure, and debt collection lawsuits.

Why you Need to Hire a Bankruptcy Attorney in Ohio

Are you interested in proceeding with Chapter 13 bankruptcy? Richard P. Arthur, Attorney at Law, can help you decide if bankruptcy is the right decision for your financial situation and if so, help you file for Chapter 13 bankruptcy. Richard P. Arthur has handled hundreds of bankruptcy cases across Ohio and can help you every step of the way. Contact us today at 937-254-3738 for a consultation.