Chapter 13 – The Better Bankruptcy Choice

Most everyone wants to a file a Chapter 7 Bankruptcy until they learn of all the advantages of filing a Chapter 13.

Attorney Jack Pitts, who personally has over 30 years of legal experience in Bankruptcy law will assess your situation and explain in plain and ordinary terms if Chapter 13 is right for you. Attorney Pitts has been recognized by the Rhode Island Bar Association in 2016 for his dedication and excellence in helping those individuals faced with foreclosure and in need of debt relief.

A Chapter 13 offers you the opportunity to pay back a portion or all of your debt within a defined period of time; usually 3-5 years. The initial benefit of a Chapter 13 filing, is that whatever you owe on the filing day is locked in. That means no more growing interest and penalties; no more nasty letters or phone calls; no more threats of attaching your pay, home or bank accounts; or, fear of your car being towed away during the night.

A popular misconception about a Chapter 13 filing is that you are required to pay all of your debt back. That is not true. What you are required to do, is pay the Bankruptcy Trustee (who disburses your payments to the creditors) the amount of money you have available after meeting all your ordinary and usual living expenses. So no more stealing from Peter to pay Paul, no more living with the thermostat down to 55 degrees… no more unnecessary sacrificing for you and your family.

Another benefit, is that for many people, a portion of the legal and the entire Trustee fee can be paid through the Chapter 13 Plan: meaning that a portion of your monthly payment will be used to address these fees and your creditors! It is almost like you’re not having to pay the administrative fees at all.

Other benefits of a Chapter 13, if structured properly, are that you can reduce your mortgage payments, eliminate a second mortgage (if certain criteria are met), stop foreclosures and repossessions and pay back any arrearage due on YOUR terms, eliminate judgment liens on your property, eliminate debt without being assessed  income tax on the discharged portion of your debt, have money available to make timely payments on your home and car, pay back student loans and income tax liabilities (some income tax liabilities can even be eliminated) with much smaller payments than demanded by the federal government, improve your credit score, and so much more.

After a peaceful and informative meeting with Jack Pitts at Pitts & Burns in Johnston Rhode Island, with compassionate care and plentiful parking, he will tell you what opportunities are available for you.

BANKRUPTCY AND YOUR AUTOMOBILE LOAN OBLIGATION

Many debtors contemplating Chapter 7 or 13 Bankruptcy do not want to list their automobile finance company as a creditor out of fear of losing their automobile. This should not be a concern for most people.

The good news is that more often than not, with the help of the law firm of Pitts & Burns, your vehicle will not be affected by any Bankruptcy filing. So long as you are current with your monthly payments, your finance company cannot and will not take your car in the Federal District of Rhode Island.

When you file for Bankruptcy you must list all of your creditors, including your finance company, even if you are current on your payments. You are obligated to name all creditors in your Bankruptcy, but there is a process for effectively removing them so that they are not affected by your Bankruptcy Discharge. This is done by reaffirming that obligation. Whether reaffirming that obligation is in your best interest requires a thorough analysis of your financial situation by Attorney Jack Pitts.

Chapter 7      

If you are seeking Chapter 7 bankruptcy relief, then you will file as part of your petition, a Statement of Intention. In that statement you are alerting your finance company that while they were named in your Bankruptcy that it is your intention to reaffirm that obligation. Therefore, when the financer receives notice of your Bankruptcy they will also know that it is your desire to keep your automobile and remain current on your obligation to their company. Once the reaffirmation agreement is executed and filed with the Court, the finance company will continue to report your timely payments to the credit bureaus.            You can also use that same Statement of Intentions to state that you want to give up your automobile. Debtors might want to do this for several reasons, usually though, because they are behind in their payments and have no practical way of catching up. The other reasons include that a Debtor owes more than the car is worth, or, they want to use the Bankruptcy opportunity to walk away from monthly payments that are too high. The filing of the Bankruptcy is an excellent time to regroup and not only discharge your overwhelming credit card debt, but also to reduce your living expenses that may have gotten out of hand, i.e. $500.00 per month auto payments.

 

Chapter 13

Debtors file for Chapter 13 Bankruptcy relief for many reasons. The most common cause is due to a loss of income, i.e., job termination, layed off, death, loss of a spouse, etc.. Many Debtors even after they regain their past income status, still cannot get out of the hole they found themselves in due to the rigidity of the demanding and obnoxious creditors. Creditors do not want to wait for their money and continue to add high interest and penalties making it impossible to ever get caught up.

A Chapter 13 puts you back in control of your finances. The Bankruptcy Court will allow you to pay creditors what you can reasonably afford (as determined by a number of methods); and for the first time, with a light of hope at the end of the tunnel.  After speaking with an experienced attorney at Pitts & Burns, you will know if Chapter 13 is the correct avenue for you.

Debtors can use a Chapter 13 filing for a number of good reasons as it pertains to their automobile obligations. The most popular reason is that they are threatened with repossession of their automobile due to a default in their regular payments and they cannot afford to lose their mode of transportation nor can they pay the arrearage off in one lump sum.  Chapter 13 will enable Debtors to pay back the arrearage due the finance company over time, usually 3 to 5 years. This way the threat of losing your automobile or getting into further debt is no longer necessary.

If you are current on your automobile, then you can continue paying your finance company outside of the bankruptcy and just concentrate on your other debt. There is no need to reaffirm your automobile finance obligation in a chapter 13.

You can also surrender your vehicle to the finance company in your Chapter 13 if you feel that the obligation is not worth continuing with.

A Chapter 13 also offers other very attractive options for the Debtor with a “bad” automobile loan. A Debtor can restructure their loan obligation so that you only pay the current fair market value of the vehicle and not what your current balance is. This is especially attractive to people who had to roll in their last car’s indebtedness into the purchase of their present car. For example, many people end up with their current car being worth $10,000.00, but owe $25,000.00.  Why pay back more than your car is worth if you do not have to. This option is not available to everyone, so you should discuss that with the law firm of Pitts & Burns who have been practicing law for over thirty years.  If you have owned your automobile for more than 910 days then you should be considering this option. You may also be able to reduce the interest rate you are paying on your current obligation.

Attorney Jack D. Pitts of Pitts & Burns is ready and able to help you.

 

Chapter 13 Bankruptcy Stops Harassment and Controls Debt

The filing of a Chapter 13 Bankruptcy petition can return financial control to you and your Family’s future. For most individuals the choice of filing a Chapter 7 or 13 Bankruptcy is mandated by your household income and the statutory calculations that must be administered. Chapter 7 Debtors are traditionally those individuals who have little to no incomes to even meet their basic needs. Whereas, a Chapter 13 Debtor is satisfying all of his/her household and living obligations, but does not have enough excess income to pay anything but interest on their ever-growing debt. A Chapter 13 allows you to freeze your current balances and pay your unsecured creditors a pro-rata portion of what is determined to be available after satisfying all of your basic and necessary expenditures. Then after a relatively short time, you will be starting all over again: free of all unsecured debt that once left you immobile. This method is far more palatable then sacrificing your and your family’s needs and really not making any headway.
A Chapter 13 Bankruptcy involves establishing a financial Plan between 36 and 60 months in which you pay a reasonable sum (determined by our own situation) to the Trustee’s office, and in the end whatever dischargeable debt was not paid in full, is discharged forever. There will in fact be a light at the end of the tunnel.
If that seems too good to be true, it is. For most people filing for Chapter 13 relief, there will be a feeling of extreme relief. No more cutting corners, staying up nights, living on the edge or fear of wage assignments, bank levies, Court battles or endless harassment from your creditors…no longer will you be told by creditors what you can afford.
The two most common profiles of Chapter 13 Debtors are as follows. First, there are those who are meeting their financial obligations by paying minimums only, stealing from Peter to pay Paul or living like misers. Then there are those individuals who have finally recovered from a long period of unemployment, illness, or reduced wages. These people now have monies that enable them to stay current, but not enough to pay back the arrearages of past due payments that developed in the manner that the Creditors will demand.
Nobody wants to lose their home or have their pay reduced with wage assignments. And you do not need to. Chapter 13 Bankruptcy with the help of Attorney Jack Pitts with his almost thirty years of experience is your answer
At Pitts & Burns, we will spend the time to look at your income going forward and the expenses you must meet to determine what monies you really have available to distribute to creditors. Thereafter, we will create a plan that utilizes what you do have available to satisfy your creditors under the Bankruptcy laws. Mortgage and real estate tax arrearages will be paid in full and first. Then with the remaining monies, you will pay as much off as you can in your allotted period. Some people will pay off their creditors in full and others maybe 5%. The Court and pertinent Federal Laws just demand that you pay what is determined to be available after satisfying your reasonable living expenses and nothing more.
Don’t lose your home to foreclosure or deal any longer with Creditor harassment. At Pitts & Burns, we can help.

LOAN MODIFICATIONS FOR AUTOMOBILES

Lots of people ask if they can modify their car loans as they have with their home mortgage. The answer is yes, subject to some restrictions which require you among other things to be in an active Bankruptcy.

First, you cannot get any form of modification if you file for Chapter 7 Relief. You can though in a Chapter 13 if you meet certain specific criteria. This maneuver is known as a “cramdown”. If you are eligible, you may be able to enjoy two types of relief. First, you will only have to pay back that portion of the outstanding loan equal to the vehicle’s current fair market value. Second, your monthly payments can be reduced.
The mandates for a cramdown require you: to be at least 910 days into your loan (about 2 ½ years) and that your vehicle be worth less than you owe on the subject obligation. Even if you have not had your vehicle loan for the requisite 910 days, you may still be able to enjoy the benefit of lowering your current interest rate to reduce your monthly obligation payment. So either way, you can still come out a winner.
Your Chapter 13 Plan will range in life from three to five years. You are allowed to extend your loan through the length of the plan, which will reduce your monthly payments. The principal due on the loan can only be reduced if your car is worth less than what you owe. You will need to prove to the satisfaction of the Court what the automobile’s current value is. The lender on the other hand will try to convince the Court that your assessment is wrong.
In both cases of reducing interest or lowering the principal due, you must complete the Chapter 13 Plan. You cannot convert your case to a Chapter 7 Bankruptcy or have it dismissed without losing these opportunities.
If successful, you have saved yourself thousands of dollars with the help of an experienced bankruptcy law firm, like Pitts & Burns.