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Understanding Chapter 13 Bankruptcy in Virginia and How to File

Bankruptcy is a legal procedure that provides relief to individuals or businesses who are unable to pay their debts. It allows them to reorganize their financial obligations and make a fresh start. Of the different types of bankruptcy, Chapter 13 is a unique one designed to benefit individuals with a regular income by allowing them to repay their debts over time. Here’s everything you should know about filing for Chapter 13 bankruptcy in Virginia.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy, also known as a wage earner’s plan, is a form of bankruptcy that allows individuals with regular income to create a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years.

Unlike Chapter 7 bankruptcy, which involves liquidation of assets, Chapter 13 bankruptcy permits individuals to keep their property and repay creditors out of their future income. This aspect makes it a preferred choice for individuals who have valuable non-exempt property or significant equity in their home, which they want to keep.

Another significant feature of Chapter 13 bankruptcy is the ability to modify some creditor rights, such as reducing the amounts paid on certain debts or altering the terms of a home mortgage.

Reasons to File for Chapter 13 Bankruptcy

There are several reasons why individuals choose to file for Chapter 13 bankruptcy:

  • Avoid foreclosure
  • Consolidate debts
  • Protection of non-exempt property
  • Discharge certain debts that can’t be discharged in Chapter 7

Defining Your Eligibility for Chapter 13 Bankruptcy

Not everyone is eligible to file for Chapter 13 bankruptcy. There are specific criteria that need to be met:

Regular income: Individuals need to show that they have a regular income and are capable of meeting the payment obligations under a Chapter 13 plan.

Debt limits: There are debt limits for filing a Chapter 13 bankruptcy, which you must meet to be eligible.

Previous bankruptcy filings: Individuals cannot file for Chapter 13 bankruptcy if they have had a bankruptcy petition dismissed during the 180 days prior due to their failure to appear in court or comply with court orders. 

Credit Counseling: Before filing for Chapter 13 bankruptcy, individuals must receive credit counseling from an approved credit counseling agency.

Chapter 13 Bankruptcy Process

Credit Counseling

Before you can file for Chapter 13 bankruptcy, you are required to complete a credit counseling course from an approved agency. This requirement aims to ensure that you are fully aware of alternatives to bankruptcy and that bankruptcy is the right choice for your financial situation.

Filing the Petition

Once you have completed credit counseling, the next step is to file a petition with the bankruptcy court serving your area. This petition initiates the bankruptcy process. Along with the petition, you must also file several other documents, including schedules of assets and liabilities, a schedule of current income and expenditures, a schedule of executory contracts and unexpired leases, and a statement of financial affairs.

Submitting a Repayment Plan

In addition to the documents mentioned above, you must also submit a proposed repayment plan. This plan should outline how you intend to pay off your debts over the next three to five years. The length of your repayment plan depends on your income relative to your state’s median income. If your income is below the median, you will have a three-year plan unless you request and justify a longer period. If your income is above the median, you will have a five-year plan.

Confirmation Hearing

After submitting your repayment plan, the bankruptcy court will hold a confirmation hearing. At this hearing, the court will decide whether your plan is feasible and meets the standards for confirmation set forth in the Bankruptcy Code. Creditors may also attend this hearing and object to the confirmation of your plan.

Making Plan Payments

If the court confirms your plan, you will begin making payments to a bankruptcy trustee. The trustee will distribute these payments to your creditors according to the terms of your plan.

Discharge

Once you have completed your repayment plan, the court will discharge the remaining balance of qualifying debts. This discharge releases you from the obligation to pay these debts and prevents creditors from taking any collection actions on these debts.

Determining Whether You Can Afford Your Chapter 13 Repayment Plan

When you file for Chapter 13 bankruptcy, you will need to submit a repayment plan to the court. This plan will outline how you intend to repay your debts over the next three to five years. Determining whether you can afford your proposed repayment plan is a crucial step in the bankruptcy process.

To determine whether you can afford your repayment plan, you will need to assess your income, expenses, and debts. Your income should be regular and sufficient to cover your necessary living expenses, such as food, housing, utilities, and transportation, as well as your proposed plan payments.

What to Do if You Can’t Pay Your Chapter 13 Repayment Plan

If you are struggling to make your Chapter 13 plan payments, it’s crucial to take action as soon as possible. Here are some options you may consider:

  • Modify Your Plan
  • Convert to Chapter 7
  • Dismiss Your Case
Benefits of Speaking with a Bankruptcy Lawyer

Navigating the bankruptcy process can be complicated and overwhelming. Speaking with a bankruptcy lawyer can provide numerous benefits:

Professional Advice

A bankruptcy lawyer can provide you with professional advice on whether bankruptcy is the best option for you, which type of bankruptcy to file, and how to navigate the bankruptcy process.

Understanding of Bankruptcy Laws: Bankruptcy laws are complex and vary by state. A bankruptcy lawyer has the knowledge and experience to understand these laws and can ensure that you are following all legal requirements.

Assistance with Paperwork

Filing for bankruptcy involves a significant amount of paperwork. A bankruptcy lawyer can help you accurately and completely fill out all necessary documents.

Representation in Court

If you need to attend a court hearing during your bankruptcy case, a bankruptcy lawyer can represent you and advocate on your behalf.

Contact The Law Offices of Robert S. Brandt to Get an Initial Consultation on Chapter 13 Bankruptcy in Virginia

If you’re considering bankruptcy, the Law Offices of Robert S. Brandt can provide the expert advice and guidance you need. Our team has extensive experience in helping individuals navigate the bankruptcy process and can help you understand your options and make informed decisions about your financial future.

To get started, contact us to schedule an initial consultation. 


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Chapter 13 Bankruptcy vs. Debt Consolidation: Understanding the Differences

When it comes to managing overwhelming debts, individuals have a variety of options. Two popular choices are Chapter 13 bankruptcy and debt consolidation programs. Both can help individuals to repay their debts, but there are differences between them. Here we compare Chapter 13 bankruptcy and debt consolidation programs, highlighting the unique features of each option from a Chapter 13 bankruptcy attorney.

Proposed Chapter 13 Plan

A key feature of Chapter 13 bankruptcy is the plan itself. This plan outlines how the individual will repay their debts over a period of three to five years. The court must approve this plan, but it provides a clear roadmap for the individual to follow, and this cannot be changed by creditors once in place.

In contrast, debt consolidation programs do not typically involve a proposed plan. While the program may negotiate with creditors to reduce interest rates and waive fees, the individual is still responsible for making payments on time. There may be some flexibility in the payment schedule, but it is ultimately up to the individual to manage their debts.

Revoking Discharged Debt

In some cases, a debt discharge may be revoked even after the bankruptcy process is complete. This can happen if the individual committed fraud during the bankruptcy process failed to disclose all assets and debts, or otherwise violated the terms of the bankruptcy agreement.

If a debt discharge is revoked, the individual is once again responsible for repaying the discharged debts. It is important to understand the terms of the bankruptcy agreement and to comply with all requirements to avoid the possibility of a discharge revocation.

Automatic Stays From Collection

One of the most significant benefits of Chapter 13 bankruptcy is the automatic stay. This is a court order that immediately stops most creditors from attempting to collect debts. It can provide much-needed relief to individuals who are facing harassment from creditors.

Debt consolidation programs do not typically involve an automatic stay. While the program may negotiate with creditors to reduce interest rates and waive fees, the individual is still responsible for making payments on time. There may be some protection offered by state and federal laws, but it is not as comprehensive as the automatic stay provided by Chapter 13 bankruptcy.

Less to Pay Back

Debt consolidation programs aim to consolidate multiple debts into a single, more manageable payment. The program negotiates with creditors to reduce interest rates and waive late fees, allowing the individual to pay back less money over time. While this can provide relief, it is important to note that the individual is still responsible for repaying the full amount owed.

On the other hand, Chapter 13 bankruptcy allows individuals to discharge certain debts entirely. This means that they may only have to pay back a portion of what they owe, based on their income and expenses. This can result in significant savings, allowing the individual to get back on their feet more quickly.

More Flexibility to Build a Plan

Chapter 13 bankruptcy provides individuals with significant flexibility to build a plan that works for them. They can propose a plan that prioritizes certain debts, such as mortgage payments or car loans while reducing payments on others. This can allow individuals to maintain ownership of assets that might otherwise be lost in bankruptcy.

In contrast, debt consolidation programs do not typically provide as much flexibility. While the program may negotiate with creditors to reduce interest rates and waive fees, the individual is still responsible for making payments on time. There may be some ability to prioritize certain debts, but it is not as comprehensive as the flexibility provided by Chapter 13 bankruptcy.

The Allowed Dischargeable Debts

In Chapter 13 bankruptcy, certain debts are considered “dischargeable.” This means that the individual is not responsible for repaying them once the bankruptcy process is complete. Some common dischargeable debts include credit card debts, medical bills, personal loans, and utility bills.

However, it is important to note that not all debts are dischargeable in Chapter 13 bankruptcy. For example, certain taxes, student loans, and child support payments cannot be discharged. It is important to consult with a qualified bankruptcy attorney to understand which debts can be discharged and which cannot.

Debt Reaffirmation

In Chapter 13 bankruptcy, individuals may have the option to “reaffirm” certain debts. This means that they agree to continue making payments on the debt, even though it would otherwise be discharged in the bankruptcy process. This can be beneficial if the individual wants to maintain ownership of a particular asset, such as a car or home.

However, there are some issues to consider when reaffirming debts. If the individual falls behind on payments, they may be at risk of losing the asset in question. Additionally, reaffirmed debts are not dischargeable in the future, so the individual will remain responsible for repaying the debt even if their financial situation changes.

It is important to carefully consider the decision to reaffirm a debt and to consult with a qualified bankruptcy attorney before making this choice.

Contact the Law Offices of Robert S. Brandt to Request a Consultation with the Best Bankruptcy Attorney

If you are considering Chapter 13 bankruptcy or debt consolidation as a debt relief option, it is important to consult with a qualified Chapter 13 bankruptcy attorney who can guide you through the process and help you make informed decisions. At The Law Offices of Robert S. Brandt, we have the experience and expertise necessary to provide you with the guidance you need.

Don’t wait to get the help you need. Contact the Law Offices of Robert S. Brandt today to schedule a consultation with the best bankruptcy attorney. We are here to help you navigate the bankruptcy process and achieve financial stability.


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Understanding Your Responsibilities When Filing Chapter 13

Filing Chapter 13

No one wants to be in a position where filing for bankruptcy is the only option. But if you are, filing for Chapter 13 bankruptcy can provide you with the protection and structure you need to start fresh. Knowing your responsibilities when filing Chapter 13 can help ensure a successful outcome. Here’s what you should keep in mind.

Make Payments to Trustees in Full and on Time

This might seem obvious, but you would be surprised how many people forget to make their payments on time. When filing for Chapter 13, you are required to make payments to a trustee, who will then distribute the funds to your creditors. You must make payments in full and on time to stay in good standing and complete the process.

Always Open All Mail

It’s important to stay on top of all the documents and communications related to your case. Opening all mail can help ensure that you don’t miss any important deadlines or documents.

Confirm and Read Every Document Carefully Before Signing

It’s essential to read and confirm every document before signing it. Pay close attention to the terms and conditions in each document to make sure you understand what you agree to.

Don’t Sell Any Property Before Getting Approval from Bankruptcy Court

If you need money during the bankruptcy process, you may be tempted to sell off some of your property. However, this is not allowed without approval from the bankruptcy court.

Maintain Your Tax Obligations and Bills While Filing Chapter 13

You are still responsible for paying your taxes and bills during the bankruptcy process. Make sure you stay up to date with all of your obligations to avoid any issues.

No Gambling is Permitted if You Are in Chapter 13

Gambling is not permitted while filing for Chapter 13 bankruptcy. Any winnings must be reported to the Court and will be used to pay off your creditors.

Keep Your Address Current with the Court

Make sure you keep the court updated with your current address. This will help ensure that all communications are sent to the right place.

Be Honest and Accurate With Your Attorney

It’s important, to be honest, and accurate with your attorney. They need to understand your financial situation in order to represent you properly.

Notify Your Attorney When There Are Changes in Your Life

If there are any changes in your life, such as a job loss or income reduction, make sure you notify your attorney right away. This will help them adjust your filing accordingly.

Hire a Professional, Experienced Bankruptcy Attorney

Hiring an experienced and knowledgeable bankruptcy attorney is essential to ensure a successful filing. An experienced attorney will be up to date with the latest laws and regulations and will be able to help you navigate the process.

Stay Up to Date With All Developments in Your Case

It’s important to stay informed about what’s going on with your case. Make sure you are aware of all the deadlines and documents you need to submit.

Request a Consultation With the Law Offices of Robert S. Brandt Before Filing Chapter 13 Bankruptcy

If you need help filing for Chapter 13 bankruptcy, it’s important to contact an experienced attorney. Request a consultation with the Law Offices of Robert S. Brandt to learn more about your options. Our team of experienced attorneys will help you navigate the process and ensure a successful outcome.


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Objection to Confirmation of The Plan…Now what?

Roughly 30 days after filing your chapter 13 case you will have to attend a meeting of the creditors where you will meet with the chapter 13 Trustee Thomas P. Gorman. In 99 percent of cases no creditors will be present at this meeting and you will spend about two minutes answering a few questions by Mr. Gorman. After the hearing concludes most clients want to know: Now what? The answer is it depends.

The ball is now in the hands of the chapter 13 trustee. If he has absolutely no objections to your case (for example, you filed a “100 percent plan” and crossed all of your “t’s” and dotted all of your “I’s”) then things remain quite for about one month and then the case is confirmed by the bankruptcy judge. Confirmed simply means that the payment structure that you chose in your chapter 13 plan is approved by the bankruptcy court. A confirmation order will then be issued by the bankruptcy court.

On the other hand, if the chapter 13 trustee has a “problem” with your case he will file an Objection to Confirmation of the Plan. He will usually do this within about two weeks after the meeting of creditors takes place. The trustee must file his objection to confirmation no later than seven days prior to the confirmation hearing date. If he does not do so then the case gets confirmed.

The typical objections that the trustee will assert is that he simply does not believe that you are proposing to pay enough money to the creditors in light of your disposable income, that the plan is underfunded due to the fact that your monthly payments are not enough to pay out all the creditors the amount that you are proposing, or you have a feasibility problem. Meaning, despite your good intentions, he simply does not believe that it is realistically possible for you to pay your creditors the amount proposed since you simply do not have the income to support such payments.

The important thing to remember is that an Objection to Confirmation of The Plan by the trustee does NOT mean that your case is doomed or is about to get dismissed! If you feel that the trustee’s objections are improper or unfounded then you can respond in writing to the objections and appear in court on the date of confirmation and explain to the bankruptcy judge why the trustee is wrong. If the judge agrees with you then the objections by the trustee will be overruled and the case will get confirmed by the judge.

On the other hand, if you agree with the objections by the trustee you can consent to denial of confirmation which means that when the case appears before the judge the plan will be denied, BUT with leave to amend within 21 days thereafter. In other words, at the confirmation hearing the judge will give you up to 21 days to file an amended plan and to get the amended plan confirmed. If the amended plan is once again met by objection(s) by the trustee then you can file a second amended plan in order to get your plan confirmed. And if the second amended plan is met with objection and denied confirmation then….

The point is that an objection to confirmation is not fatal! You will get a second, third or even fourth bite at the apple in order to get your plan confirmed by the court. The cases will drag on for months and months during this process. However, keep in mind that all good things do come to an end. If the objections to confirmation simply cannot be cured –because you lack the income for example- then the case will eventually get dismissed or you will have to convert to a chapter 7 bankruptcy.


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TAX RETURNS, TAX LIABILITY AND TAX REFUNDS IN CHAPTER 13 CASES.

One of the things that is required of you while you are in chapter 13 bankruptcy (at least here in Alexandria, Virginia) is that you file your federal and state tax returns by April 15 during each and every year that you are in bankruptcy. Extensions are not permitted and the chapter 13 trustee Thomas Gorman will expect to receive copies of your returns by May 1st of each year. Otherwise expect him to file a Motion to Dismiss your case if you fail to do so. Copies of your tax returns should be sent to his Alexandria office located at 300 North Washington Street, Suite 400, Alexandria, Virginia 22314. No need to send them to me as well.

As for tax refunds, and the issue of having to turn over those refunds in excess of $250.00 to his office, here are a few things to keep in mind. First, if your case ends with the letters “RGM” which are the initials of Judge Mayer then you do not have to worry about turning over your tax refunds regardless of the amount during the 3/5 years that you are in bankruptcy. If your case number however ends with “BFK” which are the initials for Judge Kenney, then unfortunately those refunds will have to get turned over. It is just a matter of luck in other words. There are just two judges in the bankruptcy court in Alexandria, Virginia so your odds are 50/50. And to make matters worse, the answer is “no,” as in the tax refund that you turn over will not go towards paying down the amount you owe so as to get you out of bankruptcy sooner. Think of the refund as a bonus for the creditors.

Second, typically the very first refund that you get while in chapter 13 bankruptcy can typically get exempt/protected so you will not need to turn over that first refund during year one or year two of your case. Also, if yours is a 100% chapter 13 plan, then no need to worry about turning over your tax refunds.

Third, just because your case was assigned to Judge Kenney does not mean that you need to despair. One fairly simple “trick” to employ is to modify the number of withholding that you claim on your pay checks and reduce the amount in payroll taxes that you pay during the year, thus reducing or eliminating your tax refund. You may not get the usual refund that you are accustomed to, but then again you will have more money in your pocket during the year.

And what if during the duration of your chapter 13 bankruptcy you happen to owe taxes one year? Fortunately the IRS, the gentle giant that it is, will allow you to pay off that liability during the remaining months that remain in your chapter 13 bankruptcy case. They will file an amended claim to reflect the new amount owed instead of forcing you to write one big check. They will only grant you this courtesy just once however. If you end up owing taxes yet again during the life of your case they will expect you to make arrangements to pay it outside the confines of your chapter 13 plan. As for the state of Virginia, their policy is different. Any tax liability incurred after the filing of your chapter 13 case must be paid by you outside of the chapter 13 plan.

Finally, in case you are wondering, the IRS and Virginia cannot intercept your tax refunds while you are in a chapter 13 and apply it to a tax debt that existed prior to the filing of your case since that would violate the automatic stay. But, if you incur tax liability after the filing of your case and then in a subsequent year obtain a refund, then the post filing refund can be applied to the post filing debt.