Chapter 13 Bankruptcy:
Akron & Cleveland, Ohio

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What is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy is different from Chapter 7 because you pay some or all of your debt, usually around 10% of your total debt.  This is accomplished using a Chapter 13 restructuring plan which lumps all your debt into one debt and provides better terms such as no interest and lower monthly payments.  Because restructuring debt involves repaying debt instead of eliminating debt, you must have regular income to file an Akron Ohio Chapter 13 bankruptcy.  You would work with our Akron bankruptcy attorney to determine how much of your future income can be used to repay the agreed upon amount. We’ll do everything we can to get you the lowest repayment plan possible. Your repayment plan will last around 3-5 years and usually require a very small monthly payment that is proven to be affordable for your financial situation. After your 3-5 year repayment plan, your unsecured debts are eliminated.

How Chapter 13 Bankruptcy Works

If you file Chapter 13 bankruptcy in Akron, Ohio, you can help define how your repayment and debt restructuring will proceed. In Chapter 13, you work closely with Dean Paolucci, our bankruptcy Attorney in Akron, to determine terms most favorable to your circumstances.  The attorney creates a written plan and submits it to the court for approval. Repayment begins about 30 days after your case is filed with the bankruptcy court, then you’re allowed a 3 to 5-year window in which to repay creditors.  You are permitted to keep all property. Creditors are required to follow the plan closely and must collect debts according to the plan.  The court oversees the entire process to ensure you are treated fairly under your new repayment plan and that your creditors adhere to the terms of the plan.

The first step to filing Chapter 13 is determining whether it is suitable to file for Chapter 13 opposed to Chapter 7 bankruptcy.  As with Chapter 7, it is necessary to fully evaluate your debts, assets, income and expenses.  Filing for Chapter 13 bankruptcy requires more involvement than filing for Chapter 7. Chapter 13 is most appropriate for those with a regular income but who continue to have difficulty repaying debts and covering monthly expenses.

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If you want to save your home, car and/or other property with equity, Chapter 13 can be a good decision to help save your assets.

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Upon deciding that Chapter 13 is a good financial decision, we’ll help you create a budget you can comfortably live with.  Based on this budget, and with the assistance of Paolucci Law, we would create a Chapter 13 restructuring plan to repay your debts.  Your bankruptcy attorney will submit this plan to the Akron bankruptcy court for approval.Throughout your bankruptcy proceeding, you will be required to attend one meeting.  Once you have made all payments required by your specific Chapter 13 plan, the plan will be terminated and all debts included in the plan will be discharged.

Benefits of Filing Chapter 13

FILING FOR CHAPTER 13 BANKRUPTCY CAN BE FREEING AND POWERFUL BECAUSE IT EFFECTIVELY STOPS ACTIONS SUCH AS HOME FORECLOSURE, WAGE-GARNISHMENT, AND REPOSSESSION.

Home foreclosure has become a serious issue especially in midwest cities such as Akron, Ohio.  Chapter 13 can help you avoid home foreclosure as well as vehicle repossession. As soon we submit your petition for Chapter 13, the court issues an automatic stay which prevents creditors from foreclosing on your home or repossessing your vehicle.  The Chapter 13 plan will then restructure your debt so that your home and car payments become manageable with your disposable income.  By lowering the interest and reducing monthly payments, Chapter 13 provides a way for you to catch up on your mortgage and car payments. Read more about saving your home from foreclosure with Chapter 13 bankruptcy.

Threatened by wage-garnishments? Chapter 13 can help.

When debts go unpaid, creditors sometimes seek a judgment to begin wage garnishment.  This means that in Akron Ohio about 25% of your gross paycheck will go directly to repaying the creditor before you are paid. A wage garnishment threat can be incredibly stressful, especially if it comes out of nowhere. We can help stop your wage garnishment well before it starts so that you can take control of your hard-earned money.  Immediately upon filing for Chapter 13, wage garnishments cease and creditors are forced to accept your payments through the restructuring plan.

To qualify for Chapter 13 bankruptcy your monthly income must be enough to cover your basic living expenses in addition to your restructured debt repayment plan. Your bankruptcy attorney at Paolucci Law will help determine your available income to repay debt and we’ll make sure to create the lowest repayment plan possible by evaluating your income and working with you to develop a new and manageable budget.

Regarding mortgage payments

The Chapter 13 plan restructures payments that have fallen into arrears, but you are still responsible to pay your normal monthly mortgage payments outside of the plan or in the plan. 

In a high interest rate car loan situation?

In Chapter 13, future payments are usually included in the Chapter 13 plan, lowering the total cost of your vehicle. You also may be entitled to a 5% interest rate as opposed to the high interest rate loan you are currently in. Paolucci Law regularly takes loans at 25-30% down to 5%; which saves you thousands of dollars over the life of the loan.

Individuals with substantial back taxes and child support can also benefit from Chapter 13.  These debts are usually not dischargeable under Chapter 7 bankruptcy but can be restructured under Chapter 13 bankruptcy.  Chapter 13 allows you to eliminate interest and penalty fees and create a manageable payback plan.  Under your Chapter 13 plan, you can make payments on unpaid taxes and child support over a five year period.

A requirement for Chapter 7 bankruptcy is to pass the Chapter 7 means test. If you make too much money or income according to the Chapter 7 means test, Chapter 13 can be a really good option to pursue.  Many debtors do not qualify for Chapter 7 but are in extreme need of financial assistance.  Chapter 13 can provide relief for you if you need assistance but don't quite qualify for Chapter 7 bankruptcy. Restructuring debt might reduce monthly expenses just enough to give you breathing room and allow you to strategically manage your income again; rather than throwing it all away to creditors.