Chapter 7 & Chapter 13 BankruptcyTogether we'll find the right option for you
It’s with you constantly. The feeling that you can never get out from under the mountain of credit cards, medical bills, and other debt. You’re sick and tired of dealing with the hassle. You’re sick and tired of seeing your family go without while you struggle to keep the creditors at bay. Enough is enough.
Bankruptcy offers the opportunity to be free. To be free of the constant worry, stress, and sleepless nights. To finally put a stop to the constant calls, collection letters, and lawsuits. It can even help stop foreclosures and give you breathing room to catch up on your mortgage, student loan, and tax debt.
As your counsel, I’m with you every step of the way. From the initial consultation, to the meeting with the case trustee, and to discharge, I help guide you through what can be a complex process to get you the fresh start you deserve!
Chapter 7 Bankruptcy
By and far the most common form, chapter 7 bankruptcies comprise about 70% of filings each year. While chapter 7 bankruptcies are often referred to as a “straight liquidation bankruptcy,” most filers retain all of their property. In turn, unsecured debt (credit cards, medical bills, and past-due utility bills) is wiped out. Civil judgments often can be eliminated too. But in order to take advantage of a chapter 7, filers must first pass the “means test.” By reviewing your annual gross income and household size, we can quickly determine whether you qualify for a chapter 7 bankruptcy. If you don’t, fear not! We can discuss filing a chapter 13 bankruptcy instead.
Frequently asked questions about chapter 7 bankruptcy
How long does a chapter 7 bankruptcy last?
Chapter 7 bankruptcies generally last four months from filing the petition to discharge. Sometimes a trustee will hold a case open to collect tax refunds or non-exempt property, but you will still receive your discharge four months from filing the petition.
What property can I keep in a chapter 7 bankruptcy?
For individuals filing chapter 7 bankruptcy, Indiana law allows them to keep $19,300 in equity in a home, $10,250 worth of personal property, and $400 in cash at the time of filing. These amounts are doubled for married couples filing jointly. Keep in mind though that personal property is not valued at retail prices, but rather what a willing buyer would pay for them (often garage-sale or Craigslist prices). This is how many filers are about to keep all of their property in a bankruptcy.
Are there limitations on filing chapter 7 bankruptcy?
Yes. First, you cannot have received a discharge in a chapter 7 bankruptcy filed 8 years prior to your new case. Second, filers must first pass the “means test”; meaning their annualized income is at-or-below the state median income. Don’t let this discourage you though. Median income varies with household size and location. The means test also takes into account certain IRS living allowances like car payments, withholding, healthcare, and childcare. This could ultimately allow you to be eligible for a chapter 7 bankruptcy even if your income is over the median for central Indiana.
Is there a minimum amount of debt in order to file chapter 7 bankruptcy? A maximum?
No. There is no minimum amount of debt required to file chapter 7 bankruptcy. Nor is there a maximum amount of debt that can be included in a chapter 7 bankruptcy.
Can I keep my car and home in a chapter 7 bankruptcy?
Yes. In most cases, filers in a chapter 7 bankruptcy either owe more than what the property is worth or their interest in the property is exempt. This means that the trustee will not take the property. BUT, you should be current on the payments. If not, lenders may request the bankruptcy court terminate the special protections afforded by bankruptcy and either repossess the property or sue you.
How much does a chapter 7 bankruptcy cost?
As I guide filers from start-to-finish, my fee for a chapter 7 bankruptcy is a flat $1,500 regardless of whether it is a single or joint filing (while rare, contested matters are billed on an hourly basis). This amount can paid in installments. To keep things simple, this amount includes the court’s filing fee of $335 and the cost of obtaining your credit reports electronically (which saves you time and a ream of paper). One thing to keep in mind – fees can vary from attorney-to-attorney. When searching for an attorney, always ask what services the fee covers.
Chapter 13 Bankruptcy
By and far the most common, chapter 7 bankruptcies comprise about 70% of filings each year. While a chapter 7 is referred to as a “straight liquidation bankruptcy,” most filers retain all of their property. In turn, most all unsecured debt, like credit cards, medical bills, and past-due utility bills are wiped out. However, in order to take advantage of a chapter 7, filers must first pass the “means test”. Those with with incomes higher than state median income will have difficulty being eligible for chapter 7. This may require filing a chapter 13 instead.
Frequently asked questions about chapter 13 bankruptcy
How long does a chapter 13 bankruptcy last?
Chapter 13 bankruptcies can last upwards of 60 months. The actual plan period depends on a variety of factors: whether the filer is above or below the median income, their disposable monthly income, amount of non-exempt property, and amount of claims filed by creditors in the case. So, while a plan may initially propose payments from 36 to 60 months, it’s quite possible for a chapter 13 bankruptcy to end much earlier.
What property can I keep in a chapter 13 bankruptcy?
All of your property! That’s one of the benefits of a chapter 13 bankruptcy. Since filers are proposing a plan to repay some or all of their debt using their disposable income, they are allowed to keep their property.
Can a chapter 13 bankruptcy help stop a foreclosure, sheriff's sale, or repossession?
Yes. A chapter 13 bankruptcy will stop a foreclosure or repossession provided that the arrearage is addressed and funded in a chapter 13 plan. Not only can it halt a sheriff’s sale or force a lender to return a car, but chapter 13 bankruptcy allows filers an opportunity to catch up on their past-due payments. These payments can be stretched out over 60 months.
Are there limitations on filing chapter 13 bankruptcy?
There are limits on the amount of debt included in a chapter 13. Filers must owe less that $307,675 in unsecured debt (credit cards, medical bills, utility bills) and less than $922,975 in secured debt (mortgage, car loans, title loans). A discharge won’t be granted if the filer received a discharge in chapter 7 bankruptcy within four years of filing or a discharge in a chapter 13 bankruptcy two years before filing the new case.
What happens to my debt at the end of my chapter 13 bankruptcy?
A discharge is entered upon the successful completion of the chapter 13 plan. You are then relieved of any further liability for any unsecured debt (credit cards, medical bills, utility bills, etc.) left unpaid. You will be responsible for continuing payments on any secured debts, such as mortgages and car loans, assuming that you kept the property.
How much does a chapter 13 bankruptcy cost?
Again, cost can vary from attorney-to-attorney. Since I am involved in every step for upwards of 60 months, my fee is a flat $3,500 which includes the filing fee to the court. Generally, only $500 is required to file your case. The remaining balance is be paid through the life of your chapter 13 bankruptcy plan. This makes chapter 13 an affordable option and has the added benefit of reducing what you would otherwise owe to your creditors over the life of your chapter 13 plan.
What if I later cannot make my chapter 13 plan payment?
The great thing about a chapter 13 bankruptcy is that your plan isn’t carved into stone. The courts and trustees recognize that life happens. If there is an unexpected expense or a temporary change in income, we can request a modification to reflect the change in expenses or income. If you can no longer make the plan payments, we may be able to apply for a hardship discharge or otherwise convert your case to a chapter 7 bankruptcy (provided that you qualify at that point).
I cannot afford my student loan payments. Can I include my student loans in a chapter 13 bankruptcy?
Yes! Even though most student loans are very difficult to discharge, there are times that it makes sense to include them in a chapter 13 bankruptcy. One example is when you simply cannot afford the payments and have other outstanding debt. Including the student loans in the chapter 13 bankruptcy could allow for the payments to be temporarily reduced. In turn, it may be possible for the lions share of each monthly payment to be applied to the student loans. Assuming that the payments are greater than the accruing interest, this may beat down the loan balance in a shorter period of time while reducing the amount paid to other unsecured creditors. Each case is fact-sensitive, so it is very important to have an attorney determine whether this would be a viable option for you.
Still have questions? We have answers!
What you can expectPersonal guidance through the entire bankruptcy process
How can bankruptcy help me?
Relief from the calls
The moment your case is filed, creditors are prohibited from continuing collection efforts; meaning that the calls, letters, and other efforts stop.
Relief from Garnishments
Creditors are prohibited from continuing to garnish your wages. Notice is sent to the court which issued the garnishment order and to your HR/payroll department (if you wish) to ensure that the wage garnishment ceases.
Relief from Judgment Liens
In Indiana, judgments automatically become liens on real estate owned in the county in which the judgment was rendered. However, in many cases judgments can be avoided so that they no longer encumber your personal real estate.
Relief from Driver's License Suspension
In Indiana, unpaid judgments from car accidents can result in the suspension of your driving privileges. In many cases, bankruptcy offers the opportunity to discharge the judgment and get your license back.
Relief from Foreclosure
For those facing foreclosure, in a foreclosure, or on the eve of a sheriff’s sale, a chapter 13 bankruptcy can stop the foreclosure or sale in its tracks and offers the ability to make up the past-due payments for a period of up to 60 months.
Relief from Excessive Taxes or Student Loan Payments
Chapter 13 bankruptcy provides the ability to structure tax and student loan payments over a period of up to 60 months while keeping collection efforts at bay.
Relief from credit card and medical debt.
Medical expenses are treated the same as other general unsecured debt, such as credit cards and charge accounts, and can be discharged in either a chapter 7 or chapter 13 bankruptcy.