Chapter 13 Bankruptcy New Mexico
Chapter 13 bankruptcy allows filers with a consistent income to develop a plan to pay back their debts without having to liquidate their assets. Under this chapter of the U.S. bankruptcy code, you establish a repayment plan, which will require you to make monthly payments on all your debts for the next 3-5 years. During this time, your creditors will be restricted from collection efforts as long as you continue to make timely payments. Upon completion of your payment plan, you may be eligible to have some of your remaining debts discharged, meaning you’re no longer legally obligated to pay them.
Declaring bankruptcy is a difficult choice to make and one that should not be taken lightly, even when the outcome is a payment plan rather than liquidation. Filing a Chapter 13 bankruptcy will stay on your credit report for 7 years and can lead to other financial difficulties as well. For this reason, it’s highly recommended by the U.S. Courts to seek the assistance of an attorney before filing bankruptcy.
If you’re struggling to pay back your creditors and need help clearing your debts, Chapter 13 bankruptcy is an option that may be worth considering. At New Mexico Financial & Family Law, we will advise you on all of your options and look for the best course of action for your specific situation. If that happens to be filing bankruptcy, you can rest easy knowing a seasoned Albuquerque legal team is fighting for your financial interests.
Call us at (505) 503-1637 or schedule a consultation online to speak with us and get on the path to recovery as soon as possible.
Wage Earner’s Bankruptcy Overview
Formally known as Chapter 13 bankruptcy, a wage earner’s plan will allow you to restructure your financial obligations to pay back your creditors over 3-5 years. Unlike in a Chapter 7 bankruptcy, you are not aiming to have all your debt discharged — although some may be at the completion of your payment plan. Instead, you’re expected to come up with a fixed payment plan that joins your debts into a set of monthly payments.
The name “wage earner’s plan” is based on the idea that this type of bankruptcy is geared towards individuals who have regular income as a means of paying back some or all of their debt, given enough time and leniency. This does not, however, mean that only those with a standard job are eligible. Small business owners and self-employed individuals are also able to file Chapter 13 bankruptcy.
In order to be eligible for Chapter 13 bankruptcy, your unsecured debt must not exceed $394,725, and your secured debts must not exceed $1,184,200. Many of the requirements for Chapter 13 bankruptcy are the same as Chapter 7. You will be expected to disclose all assets and income, as well as go through credit counseling with a qualified agency within 180 days of filing. You will need to provide a list of all debts you owe and their associated creditors and provide a list of all your property and assets. Unique to Chapter 13, however, is the required repayment plan.
Chapter 13 Repayment Plan Proceedings
In order to file Chapter 13 bankruptcy, you have to provide an explanation for how you plan to pay back some or all of the money you owe. This starts with you providing the details of your income, including the source, frequency, and amount you make. You’ll also need to list your monthly living expenses, including food, shelter, utilities, taxes, transport, etc.
For priority claims, such as child support and most tax debt, the repayment plan must establish how the debt will be repaid in whole. For secured debt, such as a mortgage or car loan, the debtor must include plans to repay at least the value of the collateral that secures the debt if they wish to keep said collateral. For unsecured claims, such as credit card debt, the debtor is required to pay all disposable income over the repayment period, but that does not need to cover the debt in full.
14 days from filing the initial bankruptcy petition, the repayment plan must be provided to the court. Within 30 days of filing, even if the plan has not yet been approved by the court, the debtor must begin making their monthly payments. From this point, the payment plan may be approved, or denied, and subsequently modified by the debtor.
Advantages and Disadvantages of Chapter 13 Bankruptcy
Note that there a specific case will have far more advantages and disadvantages than the brief lists below. Consulting with an experienced attorney is an important step to learning more about your options if you’re ever considering Chapter 13 bankruptcy.
- You keep your property and have protection against foreclosure and other collection efforts as long as you continue making the payments required by your repayment plan
- It is an option for those who fail the Chapter 7 means test
- The court trustees are likely to offer some leniency both in the debt you’re expected to pay back in full as well as the amount of time you’re expected to pay it back within
- You are likely to be eligible for a discharge of debt at the end of the repayment period you agree to
- You may prefer the quick and easy liquidation of Chapter 7 bankruptcy if you’re not concerned about losing your assets and property
- Chapter 7 Bankruptcy is off the table for 6 years after filing Chapter 13
- You are still obligated to pay certain debts after your repayment plan ends, including those applicable to liens on your property
- You will not have much control over your disposable income for the duration of the repayment period
Find Out if Chapter 13 Bankruptcy Is the Right Choice for You
Speaking with a local attorney about your debt situation is the first step to financial recovery. When you’re struggling to make payments on your house, car, or other property and you’re facing threats of foreclosure or repossession, Chapter 13 bankruptcy might be an option that can benefit you in the long run. Without speaking with an experienced bankruptcy attorney, you run the risk of making a mistake that can cost more into the foreseeable future.
New Mexico Financial & Family Law has been helping Albuquerque and New Mexico residents with their debt troubles for decades. We are determined to find the best course of action for you and get you on the track back to financial stability as soon as possible. Call us today at (505) 503-1637 or contact us online.
We are a debt relief agency and have practiced bankruptcy law for a combined 50 years. Our services include helping individuals and couples file for bankruptcy relief under the Bankruptcy Code.