Practice Areas

Debtor Representations in Ch. 13 Bankruptcies

On 10/17/2005 Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. This new law made some very dramatic changes in the law including a definition for a “debt relief agency” that may be applicable to attorneys. If in fact this definition applies to attorneys then we are required to make this disclosure:

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

Because there are many persons caught in the mathematics of the mean’s test, some debtors are forced to file a Ch. 13 bankruptcy case as opposed to a Ch. 7. There also can be some reasons why someone would elect to file a Chapter 13 over a Chapter 7, such as to reinstate a residential mortgage loan that is in default under circumstances where the borrower wishes to keep the homestead.

Chapter 13 cases are debt repayment plans under which some portion of a person’s debts are paid back to their creditors over a 3 to 5 year period of time through a Ch. 13 Trustee. The amount that must be repaid is a factor of how much disposable income the debtor (“assisted person” in the jargon of BAPCPA) has as well as a calculation of non-exempt equity that a person has in their assets.

Essentially what happens is that a budget is prepared where the necessaries of a person’s life are paid first and their disposable income is thereafter used to fund the repayment plan. Call for a free consultation and we can explain your options in more detail and help answer difficult questions in confidence.