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Chapter 13 Bankruptcy in Florida | Process Explained

You should consider filing a Chapter 13 plan if you 1) own your own home and are in danger of losing it because of money problems; 2) are behind on debt payments, but can catch up if given some time; 3) have valuable property which is not exempt, but you can afford to pay creditors from your income over time.

In a Chapter 13 case, you file a plan showing how you will pay off some of your past-due and current debts over three to five years. The most important thing is that a Chapter 13 case lets you keep your home, car and other valuable property if you can make the required payments. In most cases, these payments will be at least as much as your regular monthly payments on your mortgage or car loan, with extra payments to catch up on the amount you have fallen behind.

There is a debt limit when filing a Chapter 13 bankruptcy. Currently you do not qualify for a Chapter 13 bankruptcy if your secured debts exceed $1,081,400.00 or your unsecured debts exceed more than $383,175.00. Additionally you must be current on your income tax filings. You will need to provide proof that you have filed income taxes for the previous four years. You will also be required to provide a copy of your tax return to the trustee during the life of your plan. You must also show that you will pay all required debts within the plan period. If your current monthly income less reasonable living expenses won't allow you to pay off those debts within the plan period than the courts will not confirm your plan. However, this does not mean that you must pay off all of your debt.  In fact, most Chapter 13 plans will allow you to keep the property you want to keep and will pay only a fraction of your unsecured debt.

Priority debts must be paid in full in order to receive a discharge in a chapter 13 case. A priority debt is an unsecured debt that is considered important enough to take priority over your other debts. For example back taxes and child support arrearages are generally considered to be priority debts and thus must be paid in full within the plan period. For secured debts you must show that you will be able to keep current on the secured debt payments. For example, if you are keeping your home you must be able show that you are able to make your current mortgage payments. If you have fallen behind in your mortgage payment you will also be required to show that you will be able to cure arrearages within the plan period.

A Chapter 13 plan usually lasts for 36 months or 60 months. The length is determined by your current monthly income as compared to the applicable median income. If your income is less than the state median income, you may propose a 36 month plan. If your income is greater than the median then you must propose a 60 month plan.

A Chapter 13 Bankruptcy filing provides a tremendous amount of protection and is very flexible in dealing with your debt.  You can keep all of your property, strip off a second mortgage, cram down the mortgage lien on investment property and litigate issues against the creditors.  To learn more about this powerful tool, and how you can use it to protect your future, contact our Chapter 13 attorney.


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