In this article, we discuss filing for Chapter 13 Bankruptcy in Indiana and answer the following questions:
- What is Chapter 13 bankruptcy?
- Is Chapter 13 bankruptcy right for me?
- Can I keep my car and home in Chapter 13 bankruptcy?
- Do I have to repay all my debts in Chapter 13 bankruptcy?
- Do I need an attorney?
What Is Chapter 13 Bankruptcy?
In Chapter 13 bankruptcy, the debtor restructures some or all of his debt into a 3-5 year payment plan. Chapter 13 is different from Chapter 7 bankruptcy in Indiana, which focuses on eliminating as much debt as possible by liquidating all your assets and forgiving whatever debt is left over. Chapter 13 takes your three different types of debt, secured, unsecured, and general unsecured, and prioritizes them, allowing you to pay pennies on the dollar for some debts and more for others.
Is Chapter 13 Bankruptcy Right For Me?
Chapter 13 can be a great tool for those with a higher income or who have equity in their home or other property that they wish to keep. Chapter 13 is also a good option if you fail the Means Test and don’t qualify for Chapter 7. Chapter 13 provides a host of bankruptcy benefits, including:
- Triggering the Automatic Stay and providing protection from creditors;
- Stops certain lawsuits and garnishments;
- Halts foreclosures and repossessions;
- It can protect your consignors;
- Consolidate your debt into one monthly payment; and
- Cramdown unsecured debts;
If any of the above sounds good to you, then it’s worth a discussion with your lawyer to see if Chapter 13 is the best option for your debt situation.
Can I Keep My Car And Home In Chapter 13 Bankruptcy?
Chapter 13 can stop the sheriff’s sale or foreclosure on your home. Your restructured payment plan will give you 3 to 5 years to catch up on mortgage payments. In Chapter 13 bankruptcy, you also may have the option to get rid of second or third mortgages on home equity loans. Chapter 13 also protects your property from certain claims or liens from contractors and can shelter non-exempt real estate that would probably be liquified in Chapter 7.
Filing will stop repossession attempts on your vehicle and the loan interest, principal, or both can be lowered in Chapter 13 bankruptcy. For more information on this read our article Save Your Car and Home With a Zero Percent Chapter 13 Bankruptcy.
Do I Have To Repay All My Debts In Chapter 13 Bankruptcy?
Generally, yes, but you will not be paying them all in full. Secured debts have priority over unsecured debts and you will likely pay more on the unsecured debts. You will be able to reduce the principal or interest rate on many secure and unsecured debts through Chapter 13 bankruptcy. If you owe more than a car or house is worth, you may be able to “cramdown” the loan to the fair market value.
Do I Need An Attorney For Filing Chapter 13 Bankruptcy in Indiana?
There are plenty of steps in the bankruptcy process and the larger your estate the more you’ll have to deal with. Getting help from a bankruptcy attorney can ensure that your bankruptcy goes as smoothly as possible and you get the most out of the process. Chapter 7 bankruptcy can sometimes be handled on one’s own, but trying to get through Chapter 13 bankruptcy without the help of a professional can negatively affect the outcome. If you have questions about Chapter 13 bankruptcy in Indiana please give us a call.
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