Filing Chapter 13 means that you will pay back a percentage of your debt in a Court approved payment plan over a 3-5 year period. Chapter 13 is preferred by Debtors who have equity in a asset, such as a home or a car, that is over the allowed exemption ($5000 for your home, $3000 for your personal property per person in Alabama) and that they wish to keep. This is possible because under Chapter 13, a Debtor proposes to pay a plan over a period of up to 3-5 years during which the Debtor can catch up past due mortgage payments on your home. Since the Debtor's plan will require regular monthly payments, Chapter 13 is appropriate for someone who has a regular source of income.
Chapter 13 is very different from Chapter 7 since the Debtor can remain in possession of his house and automobile and makes payments to the Creditors, through the Chapter 13 Trustee, based on the Debtor's anticipated income and expenses over the life of the plan. Also unlike Chapter 7, the Debtor does not receive an immediate discharge of his debts. He must complete the payments required under the plan before he receives his discharge. Once filed, Chapter 13 protects the Debtor from Lawsuits, Foreclosures, Repossessions and Garnishments. Chapter 13 also allows the Attorney to reduce the payments on loans such as automobile and furniture loans by modifying the payment and interest rate over the life of the plan. The discharge is also considerably broader (more debts such as taxes and child support are eliminated) than the discharge under Chapter 7. The filing of a Chapter 13 can stay on your credit report for up to 7 years. The filing fee to file a Chapter 13 is $281. Another advantage in hiring the Loris Law Firm is that the attorney fees are set by the Bankruptcy Court and are paid through the plan, not up front as some law firms require.
Filing Chapter 7 means that all of your debts are completely wiped out, except for certain types of debts (some types of taxes, secured debts, child support, criminal restitution and gambling debts).
Most Chapter 7 cases have little or no non-exempt property to be distributed. This reason is why most Debtors file a Chapter 13 Debt Consolidation and keep their property rather than a Chapter 7 Straight Bankruptcy. Chapter 7 is appropriate for people that have a lot of unsecured debt, such as credit cards and medical bills, or in situations where the Debtor wishes to surrender and walk away from a house or automobile. A Debtor in a Chapter 7 case usually receives a discharge 90 days after the petition is filed. The filing of a Chapter 7 can stay on your credit report for up to 10 years. The filing fee to file Chapter 7 is $306. The attorney fees are set by the Attorney during the free initial consultation depending on how complicated the Chapter 7 case is and how much debt is discharged. The Loris Law Firm is one of the few firms in Alabama that allow Debtors to make payments on their Chapter 7 attorney fees.
If you have questions regarding your current debt situation do not hesitate to call any one of our three Alabama offices or submit your online information request today. Our discussions and your information is held in strict confidence.