Chapter 13 Bankruptcy

Reduce, Repay, and Reorganize your debt

The Zaleski bankruptcy law firm of Madison, Wisconsin can advise you about filing for protection from creditors while paying off a portion of your debts over time. If you are about to lose your house to foreclosure or have your car repossessed, we can help.

A chapter 13 bankruptcy is sometimes called a repayment plan, reorganization or wage earner’s plan. It allows individuals with steady income to create a plan to repay all or part of their debts over a 36 to 60 months time period. The repayment plan is developed by you and Attorney Zaleski and is based on your monthly budget and certain Bankruptcy Code guidelines. If your current monthly income is less than the applicable state median, your plan will usually be for three years unless the court approves a longer period. If your current monthly income is greater than the applicable state median, your plan will be for five years. While the plan is in effect, your creditors cannot initiate or continue collection efforts.

Reasons To File A Chapter 13.

Are you working as hard as you can but still struggling to pay off debts? Are you behind on your mortgage or car payments? Would it help to have a payment plan worked out with your creditors to pay back what you can afford to pay at a rate you can afford?

Individuals who make too much money to file a Chapter 7 are required to file a Chapter 13. Whether you make too much money to file a Chapter 7 is determined by financial guidelines formally known as the “means test” under the Bankruptcy Code. Another significant reason for filing a Chapter 13 is to stop foreclosure proceedings and make up delinquent mortgage payments over time. A Chapter 13 also allows individuals to pay off certain secured debts, like car loans, over the length of the plan as opposed to the contractual period. This feature oftentimes allows individuals to lower their monthly payments. Finally, a Chapter 13 allows individuals to consolidate a large number of debts through one payment plan. In this regard, you make one monthly payment to the Chapter 13 trustee who in turn pays the money to your creditors.

How Chapter 13 Bankruptcy Works.

Required Credit Counseling And Personal Financial Management Courses.

Before filing either a Chapter 7 or Chapter 13 bankruptcy, you are required under the new Bankruptcy Code to participate in an approved credit counseling class. This is generally a one-session class available on-line or over the telephone. Attorney Zaleski will be able to refer you to a credit counselor who is approved by the bankruptcy court. Prior to discharge, the Bankruptcy Code also requires that you participate in a personal financial management course. This is also a one-session class that is typically taken on-line or over the telephone between the time that you file your case and the time that you attend the meeting of creditors. Attorney Zaleski again can refer you to a credit counseling agency where you can easily and quickly fulfill this requirement.

The Bankruptcy Paperwork.

A chapter 13 case starts with bankruptcy attorney Steven Zaleski filing the appropriate paperwork with the bankruptcy court serving the area where you live. This will most likely be in either Madison, WI or Milwaukee, WI, depending on the county of your residence. The basic paperwork consists of (1) a voluntary petition; (2) schedules of assets and liabilities; (3) a schedule of current income and expenditures; (4) a statement of financial affairs; (5) a schedule of executory contracts and unexpired leases; and (6) the bankruptcy plan. Other documents that you must file generally include a credit counseling certificate and any pay stubs received from an employer during the 60 days preceding the date you filed your bankruptcy petition. You must also be prepared to present a copy of your most recent federal income tax return. If you have not filed a federal income tax return for several years or if have not received pay stubs within the 60 day period, there are other specific forms that you will have to file. If you do not file the proper documents, your case could be dismissed. There are of course specific time deadlines that apply to the filing of these documents.

In order to complete the official bankruptcy paperwork that makes up the petition, statement of financial affairs, and schedules, you should be prepared to provide the following information to Attorney Zaleski:

  • A list of all creditors including names, addresses, account numbers and balances; this information will be used to prepare the Official Bankruptcy Schedules E, F, and G.
  • Income information including where you work, how much you get paid, and how often you get paid; this information will be used to prepare the official Official Bankruptcy Schedule I;
  • A listof all of all of your personal property; this information will be used to prepare the Official Bankruptcy Schedule B; and
  • A detailed list of your monthly living expenses, i.e., food, clothing, shelter, utilities, taxes, transportation, medicine, etc. this information will be used to prepare the Official Bankruptcy Schedule J.

The “Automatic Stay”

The filing of a petition under chapter 13 automatically stops most collection actions against you and your property. For this reason, the filing of a chapter 13 bankruptcy creates what is known as an “automatic stay.” There are certain types of actions that are not automatically stopped and certain instances where the “stay” may only be effective for a short time period. But generally, as long as the “stay” is in effect, creditors may not initiate or continue lawsuits, wage garnishments, or even telephone calls demanding payments. The “stay” continues throughout the bankruptcy plan period. Your creditors will receive notice of the bankruptcy filing from the bankruptcy court clerk who sends out written notices to all of the creditors listed on your bankruptcy schedules.

The Meeting of Creditors

Under the Bankruptcy Code, a “trustee” is appointed by the court to review your case and make a recommendation to the court whether to approve your plan. The trustee also collects and distributes the monies paid into the plan to the creditors.

In approximately 20-50 days after the petition is filed, the trustee holds what is called the meeting of creditors. During this meeting, the trustee questions you, under oath, regarding the bankruptcy paperwork and matters contained in it. Your creditors are also allowed to appear and ask questions. You are required to attend the meeting and answer questions regarding your paperwork, financial affairs and property. A significant purpose of this meeting is for the trustee to determine whether he will recommend the plan to the bankruptcy court for approval. Oftentimes, modifications must be made in the paperwork and plan in order to obtain the trustee’s recommendation and court’s approval. Attorney Zaleski meets with you in advance of this meeting to advise you of the questions that will be asked and to thoroughly prepare you for all aspects of the meeting. Attorney Zaleski of course attends the meeting of creditors with you and represents you during such meeting. Finally, Attorney Zaleski makes any required modifications in the paperwork in order to get your plan approved by the bankruptcy court.

Claims Filed by Creditors

In order to be paid from the plan proceeds, a creditor needs to file a “proof of claim” with the bankruptcy court. The “proof of claim” contains information about the debt such as the amount, terms, and purpose of the debt. The “proof of claim” also lists the creditor’s address and contact information. Sometimes a claim is inaccurate and presents complications for your plan. Attorney Zaleski reviews all claims filed and resolves any such complications.

Claims filed by creditors fall into three general categories: priority, secured, and unsecured. Priority claims are claims that must be paid in full through the plan unless the creditor agrees otherwise. Examples of priority claims include taxes and child support. Secured claims are those claims that are secured by certain “collateral,” basically, property that secures the debt, like a house or car. If you wish to keep the collateral, your plan will provide for payment of these secured claims. Depending on the circumstances, you may be able to pay just the fair market value of the collateral rather than the contractual amount owed on the debt. For instance, if your car is worth $10,000.00 but you owe $20,000.00, you may be able to pay just $10,000.00 through your plan. If your plan does not provide for payment of the secured debts, you will have to surrender the collateral. As for unsecured claims, such claims generally do not have to be paid in full as long as you pay into the plan all your projected disposable income over the plan period and as long as long as the unsecured creditors receive at least as much as they would receive in a Chapter 7 case. Characterization and treatment of claims is a complex area. Attorney Zaleski reviews with you the types of claims that your case will involve and how best to treat such claims.

Modifying The Bankruptcy Plan

Sometimes during the course of the plan period, your income may go down. For instance, your spouse may lose his or her job, or you may not get as much overtime as you did in the past. In these circumstances, the plan may be modified or changed to account for the decrease in income. Oftentimes the monthly payments may be lowered or the plan may be restructured in some other fashion to accommodate your unique change in circumstances. Attorney Zaleski reviews your particular situation and devises the best way to deal with a modification of the plan.

Converting A Chapter 13 Bankruptcy to A Chapter 7 Bankruptcy

Sometimes during the course of a Chapter 13 bankruptcy, a person decides that he or she does not with to or cannot continue making the plan payments. In such instance, the Chapter 13 can frequently be converted into a Chapter 7. Certain eligibility considerations apply. Before converting the case or suggesting some other option, Attorney Zaleski reviews your situation with you and recommends the best course of action for your life circumstance.

The Chapter 13 Discharge

Generally speaking, you will obtain a discharge once you complete all payments under the plan. Other factors and requirements apply and Attorney Zaleski will discuss those with you. The discharge eliminates your liability for all debts provided for by the plan with limited exceptions. These exceptions include: long term debts like home mortgages, alimony or child support, certain taxes, debts for most government funded or guaranteed educational loans or benefit overpayments, debts arising from death or personal injury caused by driving while intoxicated or under the influence of drugs, and debts for restitution or a criminal fine included in a sentence on the debtor’s conviction of a crime.

Certain debts that are not dischargeable in a Chapter 7 may be dischargeable in a Chapter 13, for instance, debts arising from property settlements in divorce proceedings. Attorney Zaleski reviews your situation with you and determines if you have debts which fall into this category.

Emergency Bankruptcy…24 Hours A Day/7 Days A Week.

If you are a day away from having a house foreclosed upon or car repossessed, you may have to have your case filed ASAP. The Zaleski Law Firm offers state of the art computer software which enables bankruptcy cases to be electronically filed 24 hours a day, 7 days a week. If you absolutely need to meet with an attorney after hours or on the weekend, Attorney Zaleski will be there, prepared and able to file your case.

Contact the Zaleski Law Firm for your free initial consultation. We can meet in our Madison or Janesville locations whichever is most convenient for you. Payment plans are available, including paying fees over time as part of the bankruptcy plan.