- March 4, 2025
- Kelvin Birk
- Bankruptcy
When debts pile up and become overwhelming, you find yourself being harassed by creditors demanding payments, and you are faced with losing your home and other possessions, the good news is that there is help available. Chapter 13 bankruptcy provides an opportunity to reorganize your debts, start rebuilding your life, and get yourself on the road to a brighter financial future.
While no one wants to have to file for bankruptcy, there are times when doing so is your best option. A successful Chapter 13 bankruptcy allows you to keep your home and other property, including nonexempt assets, while paying a portion of your debt via a court-approved repayment plan you can afford.
If you are even considering bankruptcy, it helps to get legal guidance before proceeding. The skilled bankruptcy attorneys at Birk Law Firm offer a free consultation to evaluate your situation to see if Chapter 13 or some other debt relief solution is best for you.
Understanding Chapter 13 Bankruptcy
The United States bankruptcy code provides several different ways to file for bankruptcy, and the one that is right for you depends on your individual situation. Chapter 13 bankruptcy is a consumer debt reorganization plan that enables individuals with regular income to repay all or a portion of their debt through a court-approved repayment plan affordably and in one monthly payment over a three- to five-year period. The repayment plan is overseen by a court-appointed trustee who collects payments from the debtor and distributes them to creditors.
If you successfully complete the repayment plan, remaining eligible debt is discharged and you can keep your assets, including your home and car loan, and you can even discharge a second or third mortgage lien against your house.
Benefits of Chapter 13 Bankruptcy
While Chapter 7 is the most common type of consumer bankruptcy, as long as you have a steady source of income that allows you to meet your repayment plan payments, there are many benefits of filing for Chapter 13. These include:
- Chapter 13 halts foreclosure and repossession proceedings and offers you a chance to keep your car and your family in your home. It removes the threat of upheaval and eliminates the need to find a different place to live.
- Chapter 13 provides an opportunity to restructure debts into a more manageable repayment plan, typically lasting 3 to 5 years with lower payments than you had originally. A repayment plan can be created even if creditors disagree with it.
- Chapter 13 provides an “automatic stay, so creditors must stop all collection activity during the repayment period. It also includes a “co-debtor stay” that can prevent creditors from pursuing co-signers, such as your spouse, on your debts.
- A Chapter 13 plan can pay any and all of your debts, including secured and unsecured debts, and even debts that are non-dischargeable such as back taxes, student loans and spousal and child support. Unsecured debts are frozen on the day of filing, which prevents further interest and late fees from accruing. This gives you time to catch up with overdue payments for secured debts like mortgages.
- Chapter 13 stays on credit reports for 7 years, as compared to 10 years for Chapter 7. While filing for bankruptcy initially damages your credit, you can rebuild quickly if you demonstrate financial responsibility by making your plan payments.
- If you are the sole proprietor of a small business, you can continue operating the business while repaying debts through an individual Chapter 13 bankruptcy case by including business-related debts for which you are personally liable.
The Chapter 13 Bankruptcy Process in Missouri
Filing for Chapter 13 bankruptcy in Missouri involves several steps.
Prepare to file — To start, you will have to gather necessary documents, complete an approved credit counseling course (which can be done online), and pay filing fees. You will have to provide information including your Social Security number, home address, employment and income information, a list of all of your creditors, a list of all of your valuable property and all financial accounts in your name, and a list of your recurring monthly expenses. You will also have to provide state and federal tax returns for the previous two years
File the petition – File a bankruptcy petition and proposed repayment plan to the court for approval. Once you have filed, the automatic stay takes effect and a trustee will be appointed to oversee the case, review your bankruptcy schedules and proposed payment plan, and organize creditor meetings. The trustee will thoroughly review your paperwork, particularly the assets you have in your possession and the exemptions you wish to claim, and can challenge any element of your case.
Attend a 341 creditor meeting – At this meeting you answer questions about debts and the proposed plan. During the meeting, creditors may ask questions about the case, but they rarely attend for Chapter 13 cases. Objections are typically resolved by negotiation between your attorney and the creditors.
Get approval for your plan — There will be a confirmation hearing where a judge reviews and approves the repayment plan.
Execute the plan — If your plan is confirmed, you make the agreed upon fixed monthly payments to the trustee for 3-5 years. The trustee will distribute these payments to the creditors, according to the plan and, after completing all payments, the balance (if any) on the dischargeable debts you owe will be eliminated at the end of your term.
Considerations Before Filing Chapter 13
One consideration before filing, is that not everyone is eligible for Chapter 13 bankruptcy. You must be an individual (or married couple) with regular income who can manage the monthly payments in your plan, and there are certain limits to the amount of secured and unsecured debts you are allowed to have. You also need to be current on filing your federal and state income tax returns for the past four years. If you previously discharged debt in a Chapter 13 bankruptcy within the last two years or in a Chapter 7 bankruptcy within the last four years, you may be ineligible.
Be aware that there are certain debts that are required to be repaid in full. These include child support, alimony or support payments, and some secured debts like judicial and tax liens, that must be paid in full during the repayment time. Some secured debts, such as a mortgage or a vehicle loan, must remain current during the repayment plan.
Get Help from Our Missouri Chapter 13 Lawyers
Chapter 13 is complicated and has to be filed correctly, and you need to come up with a repayment plan you can live with or your debts will not be discharged. Having an experienced Missouri bankruptcy attorney from the Birk Law Firm guide you through the process can help make sure your bankruptcy is successful.
Attorney Kelvin Birk is a Certified Public Accountant as well as a lawyer, with more than 30 years of experience in accounting and tax and business consulting. This dual background gives him the essential knowledge to help you emerge from financial problems.
Call us today for a free consultation to discuss your individual situation and get started on the road to a brighter financial future.
FREE CONSULT CALL NOW 573-332-8585
Attorney Kelvin Birk
Kelvin Birk is a lawyer as well as a certified public accountant, with more than 30 years of experience in accounting and tax and business consulting, and more than 20 years of experience in numerous legal matters. This combined expertise allows our law firm to provide a level of service above that of other firms. Whatever your legal situation, your attorney at Birk Law Firm can counsel you as to the tax implications. We have experience in providing myriad legal representation services to residents of southeast Missouri and other areas.. [ Attorney Bio ]
