Three Big Questions About Chapter 13 Bankruptcy

Can I keep my car in Chapter 13 Bankruptcy?

Yes, you can keep your car through Chapter 13.  If your car is paid in full, it will just increase the amount that you have to pay back to your creditors based on the equity in your car.  If you have a car that’s worth $10,000, you’re going to have to pay back at least $10,000 worth of your debt which will increase your plan payment but you will be able to keep your car.  Conversely, if you are behind on your car and it’s either in danger of being repossessed or already being repossessed, you can file a Chapter 13 bankruptcy and pay for your car through the bankruptcy.

There are major benefits to paying for a car through a Chapter 13 bankruptcy.  For instance, it’s very likely you will get a much better interest rate in Chapter 13 then you would have on the street.  For instance, you are looking between 4% and 7% interest and a lot of people get much higher interest rates, especially if their credit isn’t so great.  A car can be put in the pot, paid at 100% through the bankruptcy and the car can be saved.  A car needs to be saved before it is sold at auction which is typically 21 days after repossession.  You will be able to keep your car or save your car through a Chapter 13 bankruptcy.

Can I keep a credit card out of bankruptcy and use it later?

It is very difficult to keep the credit card out of bankruptcy.  There are several reasons for that.  One, if you owe anything on the card, there is no chance that you’ll be able to keep the card.  The only chance to keep a credit card through Chapter 13 bankruptcy is if you have a 0 balance on the card.  But, this does not guarantee you by any means that you will be able to keep a credit card and use it after the bankruptcy.  Most of the credit card companies subscribe to a service which gives them notifications when their customers file for bankruptcy.  Most of the time these credit card companies will cancel any credit cards that are associated with those debtors who have filed bankruptcy.  Though, sometimes they do slip through the cracks and if you have a zero balance you will be able to keep it.  But I wouldn’t plan on doing it.

You will be able to obtain more credit if you need it after your bankruptcy.  It’s always better to get a fresh start.  The reason for this is so you can’t prejudice one creditor over another.  You can’t say I want to pay my Visa back but I don’t want to pay my MasterCard back.  This is just part of the Bankruptcy Code that is set up for the creditors’ sake.  So if you filing for bankruptcy I wouldn’t plan on keeping any of my credit cards.

How much does it cost to file for Chapter 13 bankruptcy? 

The filing fee for Chapter 13 bankruptcy is $281.  Attorneys’ fees for Chapter 13 bankruptcy are set by the court and they are $4000 in the state of Illinois.  The amount that your attorney will require before filing your case is set by individual attorneys and firms.  For instance, David Siegel and Associates typically asks for $650 plus your 1st plan payment in order to file.  The reason we do this is we want to get you off on a good start with the trustee by showing that your money is coming in and making your case easier to get confirmed.  The $650 includes the $281 filing fee plus $369 in attorneys’ fees up front.  That means that $3631 will be placed into your bankruptcy plan and we would receive our attorneys’ fees as you make your payments.

Chapter 13 bankruptcy fees are usually paid through your plan.  Some attorneys will file you for only $281 and some require the full $4000 upfront.

 

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