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Home » Nashville Bankruptcy: Chapters 7 and 9 » Chapter 13 (wage earner’s) bankruptcy

Chapter 13 (wage earner’s) bankruptcy

Nashville Chapter 13 bankruptcyChapter 13 bankruptcy (also called “wage earner’s plan”) allows  individuals with regular income to develop a plan to repay all or part of their debts.

Under this chapter, those in debt propose a plan to make installment payment to creditors over up to five years. If the debtor’s current monthly income is less than the Tennessee median, the plan will be for three years unless the court approves a longer period. If the debtor’s current monthly income is greater than the Tennessee median, the plan likely will be for five years.

Advantages of Chapter 13 filings

There are several advantages to Chapter 13 over the liquidation of Chapter 7:

  • Individuals have an opportunity to save their homes from foreclosure. Homeowners can stop foreclosure proceedings and may cure delinquent mortgage payments over time. Nevertheless, they must still make all mortgage payments that come due during the chapter 13 plan on time.
  • Individuals are allowed to reschedule secured debts (other than their home mortgage) and extend them over the life of the chapter 13 plan. Doing this may lower the payments.
  • Chapter 13 also protects third parties (co-signers) who are liable with the debtor on “consumer debts.”
  • This filing also acts like a consolidation loan under which the individual makes the plan payments to a chapter 13 trustee who then distributes payments to creditors.

Any working wage-earner is eligible for Chapter 13 filing (even if self-employed or operating an unincorporated business) if his/her unsecured debts are less than $360,475 and secured debts are less than $1,081,400.

Starting the Chapter 13 process

The process begins with a filing with the regional bankruptcy court. Turner Saw Offices, P.C., has experience with these cases and can help filers work their way through the process.

At the time of filing, the debtor must hand over to the court:

  • schedules of assets and liabilities
  • a schedule of current income and expenditures
  • a schedule of executor contracts and unexpired leases
  • a statement of financial affairs.
  • a certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling
  • evidence of payment from employers, if any, received 60 days before filing
  • a statement of monthly net income and any anticipated increase in income or expenses after filing
  • a record of any interest the debtor has in federal or state qualified education or tuition accounts.

As complicated as the process sounds, with a Turner Law Offices, P.C., attorney at your side your plan can be put into place quickly and easily.

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