Chapter 13 bankruptcy rules
Here are 10 rules for Chapter 13 bankruptcy
1. the most important rule: you don’t have to hand over any of your property; instead, you pay your debts out of your earnings.
2. You are not allowed to fill for Chapter 13 bankruptcy if you received a bankruptcy discharge in the last 4 years
3. You are not allowed to go for Chapter 13 if another case of bankruptcy was dismissed 180 days before.
4. You have to complete a credit counseling course prior to filing and a financial management course before obtaining a discharge.
5. You must have sufficient income to make payments under a Chapter 13 plan.
6. You need to develop a workable payment plan proposing how you plan to pay your debts over a 3 to 5 years period.
7. Administrative claims and Priority debts will be paid 100%.
8. Mortgage defaults will be paid 100% if you would like to keep your house. Other secured debts defaults have to fully paid of you want to
keep your property. Unsecured debts will be paid anywhere from 0% to 100% of what you owe.
9. You must pay on time every month; otherwise you case may be dismissed.
10. The Chapter 13 discharge is received only after you complete your pay back plan
Arkansas bankruptcy exemptions
The Arkansas bankruptcy exemptions, details the belongings that any person can exempt or defend from creditors when they are applying for bankruptcy in Arkansas.
Asset: Homestead
- Rural homestead: up to 160 acres not to exceed $2500 value; and homestead is no less than 80 acres without regard to value. The law section
is 16-66-218(b)(3), (4).
- Real or personal property used as residence, to $800 if single; $1,250 if married. The law section is 16-66-218(a)(1).
Asset: personal property
- Burial plot to 5 acres, in lieu of homestead option 2. The law section is 16-66-207, 16-66-218(a)(1)
- Clothing. The law section is Constitution 9-1, 9-2
- Motor vehicle to $1,200. The law section is 16-66-218(a)(2).
- Wedding bands; any diamond can’t exceed ½ carat. The law section is 3 16-66-218(a)(3).
Asset: Insurance
- Annuity contract. The law section is 23-79-134
- Disability benefits. The law section is 23-79-133
- Fraternal benefit society benefits. The law section is 23-74-403
- Group life insurance. The law section is 23-79-132.
- Life, health, accident or disability cash value or proceed paid or due (limited to the $500 exemption provided by §§ 9-1 and 9-2 of the Arkansas Constitution . The law section is 16-66-209
- Life insurance proceeds if clause prohibits proceeds from being used to pay beneficiary’s creditors. The law section is 23-79-131.
- Life insurance proceeds or avails if beneficiary isn’t the insured. The law section is 23-79-131.
- Mutual assessment life or disability benefits to $1,000. The law section is 23-79-114.
- Stipulated insurance premiums. The law section is 23-71-112.
Asset: MISC
- Property of business partnership. The law section is 4-42-502
Asset: Pensions
- Disabled firefighters. The law section is 24-11-814.
- Disabled police officers. The law section is 24-11-417
- IRA deposits to $20,000b if deposited over 1 year before filing bankruptcy-Firefighters. The law section is 9-968
- Police officers. The law section is 24-10-616
- School employees. The law section is 24-7-715
- State police officers. The law section is 24-6-202, 24-6-205, 24-6-223
Assets: public benefits.
- Aid to blind, aged, disabled, AFDC. The law section is 20-76-430
- Crime victim’s compensation unless seeking to discharge debt for treatment of injury incurred during the crime. The law section is 16-90-
716(e)
- Unemployment compensation. The law section is 11-10-109
- Workers’ compensation. The law section is 11-9-110
Assets: tools of trade
- Implements, books and tools of trade to $750. The law section is 16-66-208, 16-66-218(b)(6)
Assets: wages
- Earned but unpaid wages due for 60 days; in no event under $25 per week. The law section is 16-66-208, 16-66-218(b)(6)
Assets: WILD CARD
- $500 of any personal property if married or head of family; else $200. The law section is 16-66-218(b)(1), (2)
Chapter 13 bankruptcy plan
As you all know by know Chapter 13 bankruptcy is also called wage earner’s plan because it allows the debtor to repay his debts according to a pay back plan.
The debtor proposes a payment plan guided by a bankruptcy lawyer and trustee. The plan is filed with the schedules commencing the case. Also a copy of the plan will be send to the trustee and to all creditors you may have.
The Chapter 13 bankruptcy plan must be proposed in good faith and meet the following conditions:
1. the payback plan must give unsecured creditors at least as much on their claim as they would have gotten if the debtor filed Chapter 7 bankruptcy.
2. the plan must provide unsecured creditors an amount equal to the debtor’s monthly disposable income
The payback plan must also have the schedule of the payment for all propriety claims and the secure claims. Long term debts like mortgages
need to be paid 100%.You need to be aware that the payment plan must provide enough cash to pay the priority claims like tax debts or child support.
The first payment will be made witching 20 days after filling for bankruptcy and each month after. The payment will begin before the meeting
with creditors and will continue while the court resolves any disputes.The payments need to be certified fund like money or cashier checks or by by voluntary wage deduction.
Very important: You need to pay on time every month. If you miss a payment your case may be dismissed.
Chapter 7 bankruptcy petition
Chapter 7 bankruptcy procedures start when you, the debtor file a voluntary Chapter 7 bankruptcy petition at the clerk of the court.
The chapter 7 bankruptcy petition is formed a two page document (you need to fill this form) and a number of other forms.
You will need to complete these forms and under penalty of perjury you need to list and describe the following:
- your properties
- your current income
- income sources
- the current monthly living expenses
- your current debts
- properties you claim the law allows you to keep through the bankruptcy process also called exempt property
- property you owned and money you spent during the previous two years
- property you sold or gave away during the previous two years.
The entire process will depend on this Chapter 7 bankruptcy petition. Make sure you complete this form correctly and that you don’t omit to list any of your properties.
Whether or not failing to list certain debts is an honest mistake or a deliberate action, bankruptcy fraud is a serious offense that can be prosecuted.
If you hired a bankruptcy attorney he can make sure you complete the petition correctly and he can file the papers at the local bankruptcy court.
Chapter 13 bankruptcy FAQ
Here are Five Chapter 13 bankruptcy FAQ
1. How do I start?
The first thing you do when you file for Chapter 13 bankruptcy is to complete a two page request for the bankruptcy court. In this you ask for relief under chapter 13.This form is also called the “Petition”.
2. What is the 341 meeting?
This is the meeting between you, the court appointed trustee, all your creditors, and your bankruptcy lawyer. The meeting is leaded by the trustee and here you will have a discussions with your creditors and present your payback plan. More details can be found in this article: Chapter 13 bankruptcy payment plan.
3. What debts I have to pay under Chapter 13?
First you still need to pay 100% of the secure debts. The secure debts are mortgages, boats etc. You have to continue paying these creditors as before. Otherwise they can proceed with seizure actions.
Then you have to pay the unsecured debts (like credit card debts) that accrued before filing bankruptcy and that you established to pay in your repayment plan.
In the end there are the post petition debts .These are debts made after you filed for bankruptcy and must be paid in a timely fashion since
they are not protected under your payment plan.
4. Can I pay it off early?
If your earnings will allow for faster payback the bankruptcy trustee will require a large percentage of your funds in order to pay your debts. So the answer is No.
5. Can they foreclose on my house after I have filed bankruptcy?
If you paid your mortgage on time you don’t have to worry, If not the bankruptcy court may allow this.
Feel free to post a comment if you need answers to other Chapter 13 bankruptcy FAQ.
