Chapter 13 Bankruptcy No Attorney Fee to File | Only $360 in Court Costs
What is Chapter 13 Bankruptcy?
Different "chapters" of federal bankruptcy law authorize five types of bankruptcy: (i) Chapter 7 sometimes called straight bankruptcy or liquidation bankruptcy that cancels or discharges many and often all of your debts; (ii) Chapter 9 for cities and other governmental entities; (iii) Chapter 11 for large businesses; and (iv) Chapter 12 for farmers and ranchers. This page deals with Chapter 13 also called consumer reorganization bankruptcy or wage earner bankruptcy for persons with regular income and modest amounts of debt. Explore these and other topics using the Buttons to the left.
Why File Chapter 13?
With no upfront attorney fee we will file your Chapter 13 and immediately stop mortgage foreclosures, wage garnishments, IRS tax collectors, vehicle repossessions and bill collectors.
Chapter 13 gives you time to cure defaults in your home mortgage, car loan or taxes. Chapter 13 lets you keep your car and home -- provided you have a job or adequate regular income.
We only require $360 in filing fees to file. Our attorney fees are paid from money going to unsecured creditors like credit cards and small loans. Read more below or call one of our experienced bankruptcy lawyers at (877) 886-5955 to discuss these and other advantages.
Call us 24/7 toll free at 877-886-5955 for a free consultation with one of our experienced bankruptcy lawyers and so we can answer any questions that you have.
This website is not intended as legal advice to you because Chapter 13 is complicated and depends on your specific circumstances. If you are considering a Chapter 13, call us toll free at (877) 886-5955 for a free consultation for legal advice tailored to your specific unique situation. There is no obligation and the call is confidential. Or, email us using the form at the right with your questions. Please include your phone number so we can better advise you. There is no obligation. We will respond to your inquiry promptly.
This is you. When someone files a Chapter 13 bankruptcy, they are called the Debtor. If you file for bankruptcy, you are a Debtor. In Chapter 13 Debtors may keep some or all of their property by paying some or all of their debts over a three to five-year period. Chapter 7 is different because in that type of bankruptcy most debts are voided or discharged but some or most property may have to be surrendered to the Trustee or creditors.
United States District Courts
All bankruptcy cases are handled in federal courts under rules outlined in the Bankruptcy Code. Oklahoma is divided into three United States District Court Districts: (i) the Western District headquartered in Oklahoma City; (ii) the Northern District headquartered in Tulsa; and (iii) the Eastern District headquartered in Muskogee or for the Bankruptcy Court in Okmulgee.
The Western District of Oklahoma generally includes those counties touching and to the West of Interstate highway I-35. Bankruptcy hearings are conducted in Enid and Lawton as well as Oklahoma City. This includes Alfalfa, Beaver, Beckham, Blaine, Caddo, Canadian, Cimarron, Cleveland, Comanche, Cotton, Custer, Dewey, Ellis, Garfield, Garvin, Grady, Grant, Greer, Harmon, Harper, Jackson, Jefferson, Kay, Kingfisher, Kiowa, Lincoln, Logan, Major, McClain, Noble, Oklahoma, Payne, Pottawatomie, Roger Mills, Stephens, Texas, Tillman, Washita, Woods and Woodward. Bankruptcy hearings are conducted in Enid and Lawton as well as Oklahoma City.
The Bankruptcy Judge
The person with ultimate authority over your Chapter 13 case is the Bankruptcy Judge often just called Judge. Each District has at least one Bankruptcy Judge; the Western District has two. While the Judge has authority over your Chapter 13, the typical Chapter 13 Debtor rarely has any direct contact with the Judge.
The Chapter 13 Trustee
The Chapter 13 Trustee or just Trustee is a person – typically a lawyer – appointed to administer Chapter 13 cases, collect Plan payments from Debtors and disburse that money to creditors as specified in confirmed Plans among other things. The Trustee will preside at your 341 Hearing and in most cases be the only person affiliated with the bankruptcy court that you will deal. To some degree the Trustee represents the Judge; consequently, it is very important that you cooperate with him/her.
Chapter 13 Eligibility
Chapter 13 differs from Chapter 7 in a number of ways and may not make sense for you. Because Chapter 13 requires you to use your income to repay all or some debt over time, the Judge must be convinced that you can afford to pay what you say you can pay in your Chapter 13 Plan. Said another way the Judge must believe that your Plan is feasible and will be successful. If your income varies significantly or is inadequate, the Judge will not approve or confirm your Plan and your Chapter 13 may be dismissed or converted to Chapter 7.
If you have too much debt, you cannot file Chapter 13. Secured debts cannot exceed $1,149,525 and unsecured debts cannot exceed $383,175. A secured debt is where you have given a creditor a lien that includes the right to repossess or foreclose on property like your home or a vehicle if you fail to pay the debt. An unsecured debt like a credit card or medical bill does not give the creditor this right to foreclose or repossess.
Requirements to File
You must receive credit counseling from an approved agency and pay its fee before filing Chapter 13. As your Chapter 13 lawyers, we will prepare a large number of documents and forms required by the Bankruptcy Code using information that you provide us. These documents will be filed with the court to initiate your Chapter 13. You must also pay the filing fee imposed by the Bankruptcy Court at the time we file your Chapter 13. You must also arrange to pay our legal fees; however, we will agree to be paid over time through the Plan so the amount you need to pay us upfront is negligible.
First Meeting of Creditors
Shortly after your Chapter 13 is filed, notices of the first meeting of creditors will be mailed to you and all creditors and interested persons as required by Section 341 of the Bankruptcy Code, which is why this is often call a 341 Hearing. The Debtor and his lawyer must appear at this 341 Hearing chaired by the Trustee to answer simple questions about their affairs and the Plan.
For our clients in Northwestern Oklahoma we have an agreement with the Trustee to participate in 341 Hearings in our office in Enid via teleconference so those clients need not drive to Oklahoma City. For our clients in Southwestern Oklahoma and the Oklahoma City area, 341 hearings are in the Bankruptcy Courthouse in Oklahoma City near our Oklahoma City office.
This 341 Hearing is typically the only time you have to appear in court and only on rare occasions are our clients required to appear before the Judge. You must provide certain documents like tax returns, vehicle titles and wage statements to the Trustee prior to the 341 Hearing. If these documents are not provided the Trustee, your 341 Hearing will be continued to a later date and you and your lawyer will have to appear in Oklahoma City for this continued 341 Hearing.
Chapter 13 Plan
The most important part of your Chapter 13 is your repayment plan called the Chapter 13 Plan or simply Plan. We will prepare the Plan using information you provide us outlining in detail how much each creditor will be paid, how long the Plan will last – the Term – the values of your property and more. For example the Bankruptcy Code designates some debts called priority debts so important that they must be paid in full. Priority debts include child support and alimony, wages you owe to employees and certain tax obligations.
Your Plan must also outline the regular payments you will make on secured debts, such as a car loan or mortgage, as well as repayment of any arrearages or delinquent amounts of your debts – the amount past due that you are behind in your payments.
Finally, the Plan must dedicate any disposable income – above your normal and reasonable living expenses – you have left after making other required payments to pay your unsecured debts like credit card or medical bills. You do not have to repay these debts in full, or at all, in some cases. You simply must agree to pay any remaining income to unsecured creditors.
The Plan Term
The length or term of your Plan depends on the amount of your income and the amount and type of your debt. If your average monthly income over the six months prior to the date you file for Chapter 13 is more than the median income for your state, you must propose a five-year Plan. Or, if your income is less than the median, you may propose a three-year Plan. This process to determine your means to pay your debts is known as Means Testing or the Means Test and is rather complicated; however, we will perform this Means Test when we talk with you.
In some instances, below-median Debtors must extend their Plans beyond three years to repay a sufficient amount debt. Likewise, if an above-median Debtor can repay all debts in full – known as a 100% Plan – in less than five years, then a shorter Plan Term is possible.
Payment of Debts
In Chapter 13 you must pay some debts in full; others may be paid in part. Different types of debts are paid in different ways in a Chapter 13. The Bankruptcy Code groups your debts into classes and requires your Plan to pay these different classes of debt in particular ways. Common Chapter 13 classes: are (i) secured claims, (ii) unsecured priority claims and (iii) general unsecured claims.
Secured claims are claims for debts that are secured by liens on property or collateral. If you do not pay a secured debt, the creditor can repossess the collateral and sell it for payment. Common secured claims are home mortgages, property taxes that are liens on your property and vehicle loans. If you file a Chapter 13 and intend to keep the property that secures the debt, you must pay the debt.
Secured claims typically must be paid in full with interest in a Chapter 13. The interest rate depends on the debt. Depending on the circumstances, you may be able to satisfy the claim by paying less than the full amount owed – known as a cramdown. If the secured debt payments last longer than your Plan Term – say 10 years remaining on your mortgage – the full debt need not be paid off during your Plan. In that case you continue with your regular monthly mortgage payments during the Plan and also continue with that regular payment after the Plan is completed – until your mortgage is paid in full:
Mortgage debt. Mortgages need not be paid in full during the Term of a Chapter 13. Mortgage payments are made monthly during the Plan and continue to be made after the Plan is completed. If there is a past due balance – an arrearage – it must be paid in full through the Plan during the Term. To illustrate: If a $500 monthly mortgage payment is unpaid (delinquent) for five months when your Chapter 13 is filed and $500 in late fees and interest are also due – a $3,000 arrearage – you must begin making the $500 regular monthly mortgage payments as they are due and also pay through the Plan the $3,500 arrearage with interest.
Property taxes. All past due property taxes plus interest customary in the area must be paid through the Plan.
Car payments. If a loan on a vehicle is due in full during the Plan, you must pay the full balance in the Plan. How much you must pay, however, depends on a number of factors. If the vehicle is worth less than the debt and you bought the car more than 910 days ago, the secured claim is limited to the value of the vehicle. You pay market value of the vehicle plus interest through the Plan. The balance becomes part of your unsecured debt. This is an oversimplification that we can explain in more detail during your consultation with us.
Unsecured Priority Claims
Unsecured priority claims are claims not secured by collateral; however, the Bankruptcy Code has granted certain creditors priority over other unsecured debts. Unsecured priority claims typically must be paid in full through the Plan. Unsecured priority debts may include: (i) past due child support, (ii) past due spousal support, (iii) certain income tax debts and (iv) other past due domestic support obligations. Unsecured priority debts also include administrative expenses, such as attorney's fees and Trustee's fees. The Trustee normally receives about 10% of the Plan payments as compensation.
Importantly, the bulk of your attorney’s fee can be paid in the Plan often using money that would otherwise be paid general unsecured creditors like credit card debt. The advantage is that you need pay us only a nominal legal fee for us to file your Chapter 13.
General Unsecured Claims
General unsecured claims are claims that are neither secured nor priority. Common general unsecured claims or debts include: (i) personal loans, (ii) medical bills, (iii) credit card debts and (iv) utilities. General unsecured claims are paid a portion of their debt depending on your disposable income and the value of your bankruptcy estate. Simply put, your creditors receive (i) whatever your best effort at payment will yield and (ii) at least as much as they would receive had you filed Chapter 7, which is often nothing.
Debtors in Chapter 13 typically pay a very small portion of their unsecured debts in the Plan.
Confirmation of Plan
For your Chapter 13 to succeed the Judge must first approve or confirm your Plan in writing with a Confirmation Order. The Trustee and creditors can object to various aspects of the Plan; however, we will aggressively represent you in dealing with any inappropriate objections. Ordinarily we know at the conclusion of your 341 Hearing if your Plan will be confirmed; however, formal confirmation will not occur until about 30 days later when the Judge signs the Confirmation Order.
Bankruptcy law allows you to keep certain property designated as exempt under Oklahoma law – exempt assets. These exempt assets primarily include your home, most of the contents of your home, clothing, tools of the trade, pension plans, guns and one vehicle among other things – all in limited amounts. We can advise you exactly what you own that is an exempt asset.
Importantly if you have given a creditor a lien on any of your exempt assets, you must pay that debt to keep the exempt asset with some limits.
Failure to Make Payments
If you cannot complete the Plan – for example, should you lose your job during the Plan and cannot make the Plan payments – you may seek to modify your Plan. Or, the Judge might discharge your debts because of hardship. Hardship could be something like a sudden plant closing in a one-factory town or a debilitating illness.
If the Judge refuses to modify your Plan or grant a hardship discharge, you may opt to convert to a Chapter 7 or ask the Judge to dismiss your Chapter 13 returning you to the status you were in before you filed Chapter 13.
Completion of Chapter 13
Once you complete all payments required under your Plan, all remaining debts eligible for discharge will be cancelled or discharged. This means that you are no longer legally obligated to pay such debts. Before you can receive a discharge, you also must show the court that you are current on your child support and alimony obligations, if any, and that you have completed an approved budget counseling course.
Filing a Chapter 13 that will succeed is very complex. This is just an abbreviated description of what is required with a number of details omitted to keep this from being overly long. While it is possible to file a Chapter 13 without a lawyer, that is ill advised and short sighted. Without competent advice it is possible you will lose property unnecessarily or pay more than required. We encourage you to call us at (877) 886-5955 for a free consultation to determine if you are eligible for Chapter 13 and whether a Chapter 13 is in your best interests.