How Chapter 13 Works in Utah
How Chapter 13 Works in Utah
Chapter 13 bankruptcy is a reorganization of debt specifically designed for consumers. It is often called the “wage earner” plan. A business entity is not eligible to file a Chapter 13 petition. A Chapter 13 petitioner must be an individual who submits a reorganization plan to the Court for approval. A Chapter 13 plan safeguards assets against repossession or foreclosure and typically requests forgiveness of most other debts.
A Chapter 13 Trustee does not liquidate (sell) your property to pay creditors like a Chapter 7 Trustee. The Chapter 13 Trustee is more like a banker: the trustee's office receives your payment every month and then distributes your payment to creditors according to the plan of repayment you proposed in your case.
No bankruptcy filing eliminates all debts. Child support and alimony payments aren’t dischargeable, nor are most student loans and some types of taxes. But bankruptcy can discharge many other debts. A Chapter 13 discharge will help you reorganize your family finances and put yourself in a more stable position after your plan repayment plan is completed.
To be eligible to file for Chapter 13 bankruptcy, an individual must have no more than $419,275 in unsecured debt, like credit card bills, medical debts or personal loans. A Chapter 13 petition can have no more than $1,257,850 in secured debts, which includes mortgages and car loans. These figures adjust periodically to reflect changes in the consumer price index.
One of the most useful features of Chapter 13: It allows you to stop an effort to foreclose on your home. Filing a Chapter 13 petition suspends any current foreclosure proceedings. Chapter 13 allows you to regroup, stop payments on other debts so you can focus on brining you mortgage loan current. Chapter 13 does not eliminate mortgage debt or mortgage arrearages, but it allows you the ability to free enough of your income so that you’ll be able to make regular mortgage payments and keep your house.
Another useful feature of Chapter 13 is that it stops interest from accruing on unpaid tax debts arising from timely filed tax returns. Some say the Bankruptcy Code was the best collection tool Congress ever gave the IRS. Tax returns have to be completed and current in order for you to get a Chapter 13 plan confirmed. Chapter 13 forces you to lean into completing past-due returns. You have to step up to your non-negotiable duty to file tax returns. Many clients feel immense relief once they get current on tax filings and eliminate a worry that has weighed heavily on their minds for years.
If you live in Utah and are investigating whether a Chapter 13 bankruptcy filing will resolve your financial problems, contact the Law Office of Marji Hanson to discuss your debt management options. Marji can find a solution that works best for your financial circumstances.