What is the Success Rate of Chapter 13?

If debtors make the proper effort, Chapter 13’s success rate is 100 percent. Everyone who puts forth the proper effort, as outlined below, gets a fresh start.

In a successful Chapter 13, distressed debtors erase secured debt delinquency, like past-due home mortgage payments. This process also discharges most unsecured debts, like credit card debts. Perhaps best of all, a federal judge closely supervises the process, ensuring that creditors play by the rules.

The judge keeps watch, but only a Chicago bankruptcy lawyer advocates for debtors. Chapter 13 is a complex process that’s full of loopholes and exceptions. Only an attorney knows how to use these laws to benefit debtors.

Be Accurate

Correctly filling out the complex paperwork is the foundation of a successful Chapter 13. This task is not like ordering a pizza. Instead, it’s like completing a corporate tax return without consulting the instructions.

The difference between fair market value and bankruptcy value is one example. On a tax appraiser’s website, Mary’s home might have a fair market value of $300,000. But its as-is cash value, which must be listed on Schedule A, might only be a fraction of its fair market value. The same thing is true for many other assets, such as motor vehicles and personal property.

The Schedule I/Schedule J monthly income/expense balance may be even more critical. The debtors must have a sufficient amount of disposable income to consistently fund a monthly debt consolidation payment. Depending on the amount of secured debt delinquency, this payment could be about as large as a rent or mortgage payment.

This ability may be the most important qualification for a Chapter 13 bankruptcy, but it’s not written in a book. Only a Chicago bankruptcy lawyer properly prepares debtors for this condition.

Cooperate with the Trustee

A trustee supervises a bankruptcy case for a judge. Bankruptcy includes a duty to cooperate with the trustee in all matters. Usually, immediately after debtors file their voluntary petitions, the trustee requests financial documents, such as:

• Tax returns,
• Insurance declaration pages,
• Paystubs,
• Bank statements, and
• Security agreements.

These documents may seem unnecessary. But the debtor must timely provide them. Usually, a Chicago bankruptcy lawyer gives debtors a heads up before they file, so they can start gathering these documents and avoid a last-minute scramble to find them.

Later, at a 341 meeting, debtors must be completely forthcoming with trustees. Unrepresented debtors are at a decisive disadvantage at these meetings because they don’t have a legal advocate.

The trustee isn’t always on the debtor’s side. In fact, adversarial proceedings, like motions for turnover, are very common in Chapter 13 bankruptcies.

Make Payments

As mentioned, the Chapter 13 debt consolidation repayment is critical in a Chapter 13. The payment must be high enough to pay all allowed claims before the judge closes the bankruptcy. “Allowed claims” usually means past-due secured debts and some delinquent unsecured debts, such as back taxes. Usually, the debt consolidation payment also includes a commission for the trustee along with some miscellaneous other costs and fees.

Five years is a long time, and financial fortunes may change radically. If that happens, an attorney usually files a motion to modify the payment amount. As long as the proposed amount meets minimum legal qualifications, the judge usually signs off on the request.

If worst comes to worst, Chapter 13 debtors may convert to Chapter 7 at almost any time. That conversion means no monthly payment and a quicker fresh start.

Contact a Thorough Cook County Lawyer

No matter what kind of financial problem you are having, there’s a way out. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. We routinely handle matters throughout the Prairie State.

Source:

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