Chapter 13 Bankruptcy for Individuals and Small-Business Owners in Georgia
A Chapter 13 bankruptcy filing allows individuals with regular income, including income from self-employment, to repay some or all of their debts through a court-approved plan that typically lasts from three to five years. “Regular income” does not mean that a person must earn the same amount every week or month. Rather, the individual must have a sufficiently steady and reliable source of income to make the required Chapter 13 plan payments.
Chapter 13 has limits on the amount of secured and unsecured debt a person may have. Secured debts—typically including home and vehicle loans—must total less than $1,580,125. Unsecured debts, including personally guaranteed business debts, must total less than $526,700. Certain disputed, contingent, or unliquidated debts may be treated differently when determining eligibility. If your debts exceed either limit, you may need to consider Chapter 7 or an individual Chapter 11 case.
Benefits of Chapter 13
Chapter 13 offers several important benefits that are not available in a Chapter 7 case. If you are behind on payments on your home or vehicle, you may be able to cure the missed payments over time through your Chapter 13 plan and prevent a foreclosure or repossession. You may also be eligible to remove, or “strip,” a wholly unsecured junior lien on your residence, depending on the value of the home and the balances of any senior liens. Another benefit is that, in many cases, most of your attorney’s fees may be paid over time through the plan rather than entirely before the case is filed.
How Much Will Your Chapter 13 Payment Be?
Monthly Chapter 13 plan payments are based primarily on your “disposable income,” meaning the income remaining after payment of your reasonable and necessary monthly living expenses. The required payment may also be affected by secured debts, past-due mortgage or vehicle payments, priority debts, nonexempt assets, and other amounts that must be paid through the plan. After reviewing your income, expenses, debts, and assets, your attorney can estimate the amount of your monthly plan payment.
Is Chapter 13 Right for You?
Chapter 13 is often the most practical bankruptcy option for an individual who does not qualify for Chapter 7. Even if you do qualify for Chapter 7, Chapter 13 may be the better choice if you need time to catch up on missed home or vehicle payments or want to retain nonexempt assets that could be sold in a Chapter 7 case.
A Chapter 13 plan requires you to commit a portion of your income to the Chapter 13 Trustee after paying your reasonable and necessary living expenses. Scott will carefully review your income, expenses, debts, assets, and financial objectives to determine whether Chapter 13 is appropriate and whether other options, such as Chapter 7 or an individual Chapter 11 case, may be available.
The firm offers initial consultations at no cost. Scott is also available to discuss your circumstances by telephone. Please contact us to schedule a consultation.
