Owings Mills Chapter 13 Bankruptcy Lawyers
Financial challenges can affect individuals and families in many ways. When debts become overwhelming, Chapter 13 bankruptcy may offer a way to restructure payments and regain financial control without liquidating valuable assets. The process allows debtors to work out structured repayment plans under the supervision of a bankruptcy court, making it possible to manage obligations over an extended period.
At LeViness, Tolzman & Hamilton, our Owings Mills Chapter 13 bankruptcy lawyers help clients understand how filing under Chapter 13 may help organize their financial affairs. This is a major decision that impacts current circumstances and future opportunities. It is important to work with legal professionals who have detailed knowledge of the bankruptcy code and the procedures involved in these cases.
What Is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is a legal process that allows individuals with a regular income to develop a repayment plan for all or part of their debts. Unlike Chapter 7 bankruptcy, which involves the liquidation of nonexempt assets, Chapter 13 focuses on debt reorganization. Debtors propose a plan to pay creditors in installments over three to five years. The court must approve the repayment plan, and debtors must follow its terms throughout the period.
This type of bankruptcy offers certain protections, including the opportunity to stop foreclosure proceedings and prevent repossessions. Debtors who qualify for Chapter 13 are able to retain valuable property while catching up on missed payments. After successfully completing the repayment plan, any remaining eligible unsecured debts may be discharged.
Who Is Eligible to File for Chapter 13 Bankruptcy?
Individuals must meet specific criteria to file for Chapter 13 bankruptcy.
- The individual must have a regular source of income.
- There are limits on the amount of secured and unsecured debt a filer can have. These debt limits are adjusted periodically, so it is important to review the most recent figures when considering eligibility.
- The individual must not have had a bankruptcy petition dismissed in the past 180 days due to willful failure to appear before the court or comply with court orders.
- Only individuals, not businesses, may file for Chapter 13. However, self-employed individuals or those operating an unincorporated business may qualify if they meet the income and debt requirements.
What Are the Advantages of Bankruptcy?
Chapter 13 bankruptcy offers several benefits for those who qualify. One significant advantage is the ability to avoid foreclosure on a home by catching up on delinquent mortgage payments through the repayment plan. Chapter 13 also allows individuals to reschedule certain secured debts, potentially lowering payments and making them more manageable over time.
Another benefit is the protection offered by the automatic stay, which takes effect immediately upon filing. The stay temporarily halts collection actions, including lawsuits, wage garnishments, and creditor calls. Moreover, Chapter 13 plans consolidate debts into one manageable monthly payment, simplifying financial obligations. Our Owings Mills Chapter 13 bankruptcy lawyers help debtors maximize the advantages available under the law.
How Is a Chapter 13 Repayment Plan Developed?
The repayment plan is one of the most important elements of a Chapter 13 bankruptcy case. It must detail how the debtor will pay certain obligations, including priority claims like taxes and domestic support arrears, in full. Secured debts must either be paid in full or maintained according to the original loan terms unless the debtor seeks to modify them through the plan.
Unsecured creditors are typically paid only a portion of what they are owed, depending on the debtor’s disposable income and the value of nonexempt assets. Disposable income is determined by subtracting allowed living expenses from monthly income. The bankruptcy court will carefully review the proposed plan to see that it meets all legal requirements before approving it.
What Happens After Filing for Chapter 13 Bankruptcy?
After filing for Chapter 13 bankruptcy, an automatic stay goes into effect, offering immediate protection from collection actions. Debtors must also attend a meeting of creditors, commonly known as a 341 meeting. During this meeting, the bankruptcy trustee and any attending creditors may ask questions about financial affairs and the proposed repayment plan.
If the court confirms the repayment plan, the debtor must begin making payments to the trustee according to the plan schedule. The trustee then distributes payments to creditors. It is critical to make payments on time and comply with the plan’s terms. Failure to do so can result in the case being dismissed or converted to a Chapter 7 case. Debtors must also complete a financial management course before receiving a discharge at the end of the plan.
Can Chapter 13 Bankruptcy Help with Second Mortgages?
In some cases, our Owings Mills Chapter 13 bankruptcy lawyers help clients address second mortgages through a process known as lien stripping. If the value of the home is less than the amount owed on the first mortgage, the second mortgage may be reclassified as unsecured debt. Unsecured debts are often paid at a reduced rate or even discharged entirely at the conclusion of the repayment plan.
Lien stripping is a complicated process that requires court approval and specific legal arguments. Not all debtors will qualify to remove a second mortgage in Chapter 13, but many do.
How Long Does Chapter 13 Bankruptcy Stay on a Credit Report?
A Chapter 13 bankruptcy filing typically remains on a credit report for seven years from the date of filing. While the presence of a bankruptcy can impact credit scores, many debtors begin rebuilding credit even before the record drops off the report. Successfully completing a repayment plan demonstrates financial discipline, which may be viewed positively by some lenders.
During the repayment period and after discharge, responsible financial behavior, such as making timely payments and managing new credit accounts carefully, can contribute to credit recovery. While Chapter 13 affects credit standing, it often provides a path toward long-term financial health.
Our Owings Mills Chapter 13 Bankruptcy Lawyers at LeViness, Tolzman & Hamilton Can Help You Put Your Life Back Together
Filing for Chapter 13 can offer a structured way to regain control of your finances while protecting valuable assets, and experienced legal guidance will help you get there. For a free consultation, call our Owings Mills Chapter 13 bankruptcy lawyers at LeViness, Tolzman & Hamilton at 800-547-4LAW (4529) or complete an online form.
We have offices in Baltimore and Owings Mills, allowing us to represent clients in Maryland, including those in Anne Arundel County, Baltimore County, Carroll County, Harford County, Howard County, Montgomery County, Maryland’s Western Counties, Prince George’s County, Queen Anne’s County, Southern Maryland, and the Eastern Shore, as well as the communities of Catonsville, Essex, Halethorpe, Middle River, Rosedale, Gwynn Oak, Brooklandville, Dundalk, Pikesville, Nottingham, Windsor Mill, Lutherville, Timonium, Sparrows Point, Ridgewood, and Elkridge.