Radcliff Chapter 13 Bankruptcy Attorneys
Helping Hardin County Clients Build Better Financial Futures
Debt can sneak up on you, even when you are financially prudent and cautious with spending. An unexpected tragedy, a trip to the hospital, or any number of contributing and unplanned incidents can lead to ballooning debt you cannot hope to reasonably repay, even if you still have a well-paying job. Bills do not stop coming, leading to a situation where you begin to drown in debt you cannot keep up with despite your best efforts.
Chapter 13 bankruptcy is designed to extend a lifeline to those who face crushing debt and still have some means to repay. Unlike Chapter 7 bankruptcy, there is no liquidation involved. Instead, Chapter 13 bankruptcy focuses on reorganization, restructuring your outstanding debt into a more manageable, sustainable payment plan. Our Radcliff Chapter 13 bankruptcy lawyers at Musselwhite Meinhart & Staples are prepared to help you navigate the process and make the most of your filing. Our team has over 100 years of combined legal experience and has a complete knowledge of how to efficiently and effectively utilize Chapter 13 bankruptcy to build our clients more sustainable financial futures.
Qualifying for Chapter 13 Bankruptcy
If you still have considerable income, you more than likely will qualify for Chapter 13 bankruptcy over Chapter 7 bankruptcy. Chapter 7 is the other type of consumer bankruptcy that involves liquidation and passing the Kentucky Means Test. Still, a bankruptcy court will want to determine to what extent you can repay your creditors, so you will need to perform some of the same calculations you would if you were considering filing for Chapter 7.
To begin, find your average income over the past 6 months. Compare this average with the median average income for your household size in Kentucky. If your income meets or exceeds the median, you do not automatically qualify for Chapter 7 bankruptcy and may instead be eligible for Chapter 13.
Next, you will need to determine your disposable income, which will play a key role in your Chapter 13 bankruptcy process. Finding this number involves taking your average monthly income and subtracting qualifying expenses necessary to living a reasonable life. In other words, extravagances like fancy meals out, luxurious gifts, and costs stemming from a second vehicle or home will not count toward your disposable income evaluation.
You can generally subtract the following qualifying expenses in Kentucky:
- Transportation costs (including public transportation fare or costs related to a primary vehicle)
- Housing costs (including rent or mortgage payments as well as utility bills)
- Taxes (including involuntary payroll taxes and income tax obligations)
- Food (within certain limits – think weekly groceries versus nights out)
- Clothing (within certain limits – necessities versus unnecessary shopping trips)
- Medical and healthcare costs
- Life insurance payments
- Spousal and child support payments
- Childcare and certain education expenses (including some percentage of tuition)
Your level of disposable income will decide whether you qualify for Chapter 7 bankruptcy or Chapter 13 bankruptcy under the Means Test. If you have little to no disposable income and therefore limited means of repaying creditors, you may be permitted to file for Chapter 7. If you do have sufficient disposable income, you are more likely to be eligible for Chapter 13 bankruptcy.
Finally, in order to file for Chapter 13 bankruptcy, you must also confirm your debt does not exceed the thresholds established by the Bankruptcy Code. As of April 1, 2019, you can only file for Chapter 13 bankruptcy if your unsecured debts do not exceed $419,275 and your secured debts do not exceed $1,257,850. These ceilings are adjusted every 3 years and will next be amended in 2022.
Unsecured debt refers to any debt without collateral attached, including credit card debt, medical debt, personal loans, and unpaid utility bills. Secured debts do have collateral and include mortgages on a home or piece of real estate or loan on a vehicle.
Determining whether you qualify for any type of bankruptcy can be confusing, especially as you work to establish an accurate level of disposable income. Our Radcliff Chapter 13 bankruptcy attorneys are familiar with the laws involved and can work with you to confirm eligibility.
Understanding the Chapter 13 Bankruptcy Reorganization
Filing for Chapter 13 bankruptcy indicates you still have some means to partially repay outstanding debts in your current financial situation. This ability to repay is in large part determined by the disposable income you calculated under the Means Test.
Under Chapter 13 reorganization, your debts will be consolidated and restructured into a single monthly payment that you will be ordered to pay over a period of 3 to 5 years. In most cases, the amount of the monthly payment is established by your ability to pay, not the amount of your debt. In other words, you will likely only be expected to repay a portion of your debt over the course of the bankruptcy.
Benefits of Chapter 13 Bankruptcy
The fact that a typical Chapter 13 bankruptcy lasts anywhere from 3 to 5 years can frighten some, but it can be a major benefit for many who file. Filing for any type of consumer bankruptcy entitles you to the automatic stay, a court order that prevents any collection actions from being taken against you.
The order takes effect as soon as you file and lasts until the bankruptcy has concluded, meaning the automatic stay will often protect you from collection efforts for as many as 5 years. This means that you will be safe from creditor harassment, foreclosure, wage garnishment, vehicle repossession, and more for multiple years, giving you ample time to shore up funds and reorganize finances. Creditors will generally not be able to touch you so long as you continue to make your court-ordered payments.
Upon the successful completion of your payment plan, a bankruptcy court will usually authorize you to discharge any remaining unsecured debt. Remember, this can include credit card debt, medical bills, unpaid utility bills, and personal loans. While this excludes debt tied to collateral, note you will have several years to catch up on those types of payments, leading to a situation where you can emerge from Chapter 13 bankruptcy in a far more sustainable financial position.
Get the Help You Deserve with Chapter 13 Bankruptcy
When handled correctly, a Chapter 13 bankruptcy can help you discharge debt while giving you crucial time to reorganize the rest of your finances. Our Radcliff Chapter 13 bankruptcy lawyers at Musselwhite Meinhart & Staples are adept at helping Kentucky clients through this process and are familiar with all of the legal systems involved. Our team can work to calculate your disposable income and help you understand what your court-ordered repayment plan might look like. We ready to give your case the compassionate attention it deserves throughout the entirety of your Chapter 13 bankruptcy, and we are committed to treating every client like a member of our family.
Our law firm provides a full range of legal services to help you and your family achieve your goals. We speak your language. We are here to help you understand your legal options, what to expect and what steps we can take to protect you.
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Our attorneys treat you like family. We care about helping you find the best resolution to your case.
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We are friendly and approachable lawyers who listen and understand your needs.
Our attorneys have decades of experience with successfully handling a variety of legal matters.