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Chapter 7
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Chapter 13
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To eliminate most debts for a fresh start.
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Goal
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Partial repayment of debts based on what you can afford, reorganize secured loans, stop foreclosure and repossession, and protect your property.
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You are generally eligible if your average monthly income for the previous six months is less than the median income for a household your size in your county. If you make more than the median and do not have special exceptions, you need to consider Chapter 13.
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Who can file?
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Anyone with regular income, less than $1,010,650 in secured debt (like home and car loans), AND less than $336,900 in unsecured debts, like credit card, medical bills and other loans.
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Though you can do it yourself, hiring a good lawyer will make it easier and likely prevent you from making expensive mistakes. See our section on how to choose a good bankruptcy lawyer. Bankruptcy is a complex area of the law and impacts your property and your money. The vast majority of cases filed without counsel are dismissed, especially in Chapter 13.
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Will I need a lawyer?
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Absolutely. Though you can do it yourself, hiring a good lawyer will make it easier and likely prevent you from making expensive mistakes. See our section on how to pick a good lawyer. Bankruptcy is a complex area of the law and impacts your property and your money.
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Because a Chapter 7 is a Liquidation bankruptcy, the trustee is required to sell assets, like cars, that have value beyond what can be protected.
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Can I keep my car?
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Most often yes because in a Chapter 13, a debtor is repaying some, part or all of what they owe, based on what they can afford.
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If you have serious mortgage problems, a Chapter 7 filing will probably not help much. A filing may halt foreclosure proceedings for only a couple of months and missed payments may be due in full and immediately.
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Can I keep my house?
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A filing will generally halt foreclosure proceedings and may allow you to make up missed payments over time.
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Anything you own that hasn’t been exempted by law can be taken by the trustee and auctioned to raise cash for your creditors.
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Can I keep my other possessions?
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You usually can keep everything if you keep up your payment plan.
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You probably will have to pay in full what you owe the IRS for recent tax years. Sometimes you can get a break on older tax debts.
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What about the taxes I owe?
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You probably will have to pay in full what you owe the IRS for recent tax years. Sometimes you can get a break on older tax debts. However, a Chapter 13 plan may be able to provide for you to pay your tax debt over time with no penalties and interest.
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You probably will have to pay in full what you owe.
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What about back child support?
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A Chapter 13 plan may be able to provide for you to pay your child support arrears over time.
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Court fines and/or restitution can not be included in any bankruptcy and must be paid.
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What about fines I owe?
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Fines cannot be "discharged", although bankruptcy may be able to provide some relief from collection activity (the automatic stay).
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If you have on-going alimony or spousal support obligations, these will continue and must be paid.
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Will I have to pay alimony?
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Like child support arrears, back alimony or spousal support may be able to be included in a Chapter 13 plan. However, you must make all post-petition (after filing) payment in order to obtain a discharge.
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Generally, about six months after filing a discharge order will be entered. This order is the document that provides that you are no longer legally obligated on the debts included in your bankruptcy. However, certain debts, like taxes, child support and those the court may specify will not be included in the discharge.
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How long will it take?
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Generally, a Chapter 13 can run between three to five years depending on what you owe, what you own and what you can afford. Once the final payment is made under your plan, a discharge order will be entered This order is the document that provides that you are no longer legally obligated on the debts included in your bankruptcy. However, certain debts, like some taxes, child support and those the court may specify will not be included in the discharge.
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The filing fee to the Bankruptcy Court is currently $299. The attorney’s fees will vary depending on the complexity of the case you have. Our attorneys work closely with you to make it as reasonable as possible under the circumstances.
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What does it cost to file?
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The filing fee to the Bankruptcy Court is $274. Unlike Chapter 7, the attorney’s fees for a Chapter 13 are set by the court, most of which can be paid through your Chapter 13 plan.
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