Ohio Chapter 13 Bankruptcy Attorney
Financial strain can take its toll on anyone,
especially those living in Ohio. If you are becoming deeper in debt, Bankruptcy Chapter 13 – maybe your best option.
How Does Chapter 13 Work?
Chapter 13 is the most powerful, and most misunderstood debt relief option. To understand how does chapter 13 work, you must know that it’s a payment plan that might pay back NOTHING to most or all of your creditors.
Chapter 13 is more powerful than Chapter 7 in many ways. But, Chapter 13 is overlooked by many attorneys and so, is underutilized by too many consumers.
Chapter 13 lets you do things that are not possible in Chapter 7. You can lower your car interest rates, and even pay less than you owe for cars you keep. You can catch up on missed payments for your car and your home.
If you owe secured and unsecured debts (think car and credit card) to a credit union, Chapter 13 “breaks cross collateralization” so you can keep your car and not pay the credit card debt.
What Does Chapter 13 Do?
Chapter 13 allows you to restructure your debt into a 3 to 5 year payment plan. Some plans must be 5 years long, others can be from 3 to 5 years. You can keep your current vehicle, and possibly pay less for it than you would pay if you reaffirmed it in a chapter 7. At the end of the plan your car debt is gone, and all your other debt is wiped out, with few exceptions.
In chapter 13, the amount you pay to your creditors depends on a number of factors, but my chapter 13 plans typically pay only 1% to the unsecured creditors. That’s almost like a chapter 7 which pays 0%.
Sometimes the plan pays more, however. To understand how does chapter 13 work for your payment, you start with your income. If you are fortunate enough to have enough income to pay more than 1%, according to a federal law formula, then you might pay 5%, or 10%. Occasionally plans pay a lot more, but that is seldom seen. Most plans pay a few pennies on the dollar, that’s all.
The main reason people file chapter 13 is to catch up on missed car and house payments. Chapter 7 can’t help you with missed payments. Creditors can refuse to allow you to reaffirm in chapter 7 if you are behind. But creditors can’t stop your chapter 13 payment plan. The have to accept your late payments and they have to allow you to keep your car and your home.
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Here are two helpful calculators for managing your debt repayments and Chapter 13 commitments.
How Chapter 13 Plans Work
Chapter 13 payment plans are administered by a trustee, but the trustee does not monitor your bank account, or “look over your shoulder.” Our Dayton Chapter 13 trustee is John Jansing, who does an excellent job helping us keep our client’s cases on track. Once your case is filed in the Dayton Bankruptcy Court, John will review it to make sure it will properly complete.
Your payments to the trustee can be made by payroll deduction, but I often ask for, and usually can get, a bank account withdrawal approved, so your employer does not get involved.
During the plan, you will make your payments regularly and each year you will submit your tax return to the trustee. The trustee is looking for two things. First, did you get a refund over $3,000 (or more, if you get earned income credit)? Second, has your income increased significantly since your case was filed?
Plan payments usually don’t increase but it’s possible if your income increases. But, this is the “problem” we like to see! And, we try to adjust our withholding so we never have to give up any of our tax refunds.
Life During Chapter 13
Because the chapter 13 is a long term plan, it’s not uncommon for issues to arise that might impact your plan. That’s why you want to use a law office with a large and experienced staff. (Our office has 6 full time paralegals and 4 full time attorneys who help make sure we always provide the support our clients need).
Most of the time, your chapter 13 has absolutely no impact on your normal life’s activities. You can go on vacation, change jobs, move to another state, get credit cards, and even buy a house while you are in an active chapter 13 case. There are very few restrictions.
Your creditors cannot call you, sue, or even send you a bill! They are under the control of the bankruptcy court. Life returns to normal for most, and the stress and pressure from financial problems quickly disappears.
Because every case has a family budget built into the calculation, many people have more money to cover their monthly living expenses than they had before they filed. Money that used to go to pay unsecured debt is now free to pay for the family’s needs.
Is Chapter 13 Worth It?
This is a question a lot of people ask. They have heard stories about how hard it is to be successful with a chapter 13. And, the truth is that some do find it to be challenging. I’ve been filing chapter 13 cases for thirty years and have one if the highest success rates in the entire country. I believe that many people who struggle with chapter 13 do so for two main reasons.
First, people in chapter 13 often need support from their attorney. The attorney’s guidance and advice can keep a case on track and provide valuable direction to clients, keeping their case on track.
Second, we all can agree that sometimes life throws us unexpected challenges. This is true for people in chapter 13 too. And, in a chapter 13, you don’t have the option to go out and borrow large sums of money. Sometimes this is a problem. But it would also be a problem for anyone NOT in a chapter 13.
Is chapter 13 worth it? The overwhelming majority of my successful chapter 13 clients would answer with an enthusiastic YES! They keep their homes, sometimes saving them from loss through foreclosure.
From Huber Heights and cities north, to Springboro and Miamisburg in the southern part of the Dayton District, our clients report satisfaction with the successful reorganization they achieve with chapter 13. They keep their cars, and all their other property as well.
They pay back what they can, although often it’s only 1%. It’s still something, and it’s their best effort. It’s all they can afford and this is all the law requires.
Ready? Get on the Road to Bankruptcy Recovery
We are still open for remote filing and remote consultations during the pandemic. All consultations are free and there is no catch. We only work with clients who want to work with us. Nothing high-pressure. We look forward to assisting you.