Chapter 13 Bankruptcy Attorney Serving the Portland Metropolitan Area

Contrary to popular belief, bankruptcy is not the end or a sign of failure. It is a strategic legal tool that allows individuals and businesses who are overwhelmed by debt to effectively manage or eliminate their debts. Chapter 13 bankruptcy, in particular, allows those with a consistent income to keep their assets while repaying debts under a court-approved plan.  

At Lyndon Ruhnke, P.C., I have over two decades of legal experience guiding my clients through the specifics of Chapter 13 bankruptcy and making sure they achieve the best possible outcomes for their financial futures.

My services extend throughout Portland, Oregon, and its surrounding areas, including Beaverton, Hillsboro, and Gresham. 

What Is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy, often referred to as the wage earner's plan, provides individuals with a regular income a chance to reorganize their debt into a manageable repayment plan that allows them to pay back all or part of their unsecured debts, such as personal loans, credit card debt, and medical bills.  

Under Chapter 13, debtors draft a repayment plan that details the planned installments they will pay for anywhere from three to five years. This provides individuals with a structured path for managing their financial obligations while working towards long-term financial stability. 

As your lawyer, I'm committed to helping you understand the advantages of Chapter 13 and crafting a repayment plan that respects their financial limitations and future goals.

What Does Chapter 13 Do?

Chapter 13 bankruptcy serves as a powerful financial restructuring tool and offers numerous unique benefits—some aren't even available under Chapter 7 bankruptcy. These include: 

• Halts foreclosure proceedings: Initiating Chapter 13 filing immediately stops any foreclosure activities on your home. This provides you an opportunity to address missed payments over the course of your repayment plan.

• Consolidates debts: It consolidates your debts into a single repayment plan, making it easier to manage payments to creditors and work towards debt relief.

• Debt consolidation: It merges all your debts into one manageable repayment plan, making it easier to make payments to creditors and minimize existing debt.

• Prevents asset repossession: Chapter 13 offers protection for your essential assets, such as your vehicle, and prevents them from being repossessed. This allows you to manage your finances more effectively without worrying about losing valuable property.

• Stops wage garnishments and collection calls: Upon filing, Chapter 13 bankruptcy invokes an automatic stay that requires creditors to cease collection efforts. This includes wage garnishments and harassing phone calls, emails, and letters.

• Allows retention of assets: Unlike Chapter 7, which requires liquidating assets to settle debts, Chapter 13 allows individuals to keep their assets while they work on their structured repayment plan.

• Discharges certain debts: Upon completing the repayment plan, Chapter 13 may discharge your remaining unsecured debts, releasing you from specific financial burdens that were not fully repaid through the repayment plan.

• Improves credit score over time: At first, filing for bankruptcy will impact your credit score. However, your credit score will improve over time so long as you consistently make payments. 

Understanding the comprehensive benefits of Chapter 13 can illuminate a viable path forward for individuals and businesses facing overwhelming debt. An experienced bankruptcy attorney can help you better understand whether filing for Chapter 13 is right for you. 

What Doesn't Chapter 13 Do?

While Chapter 13 bankruptcy offers a financial lifeline, it's also key to recognize its limitations: 

• It does not discharge all types of debt: Some obligations, like most student loans, alimony, child support, and specific taxes, are not eliminated under Chapter 13 bankruptcy. Debtors will still be liable for these payments before, during, and after their bankruptcy filing. 

• It does not automatically protect co-signers: Although Chapter 13 bankruptcy implements an automatic stay that requires debtors to cease collection efforts against the debtor, it does not protect any co-signers on existing debt. While Chapter 13 is less risky for co-signers than Chapter 7, creditors can still potentially pursue co-signers for debt payments. 

• It cannot prevent future foreclosure or repossession: If you fail to keep up with mortgage payments after filing, mortgage lenders retain the right to foreclose on your house. Although Chapter 13 may temporarily halt foreclosure processes, retaining your home requires you to make regular mortgage payments alongside your repayment plan. 

It's important for potential filers to have a realistic understanding of what Chapter 13 can and cannot do to address their unique financial situations effectively. Consulting with an experienced bankruptcy attorney can help you better prepare for how to manage your finances. 

When Is Chapter 13 a Good Option for Debt Relief?

Chapter 13 bankruptcy is particularly suited for individuals who are struggling with debt but have a steady income that can allow them to develop a structured repayment plan.

This type of bankruptcy is particularly suitable for those who wish to avoid foreclosure, stop vehicle repossession, and keep valuable non-exempt property that might otherwise be lost in a Chapter 7 filing.  

It's also a viable solution for individuals who have previously filed for Chapter 7 bankruptcy but require further debt relief. For those who are committed to repaying their debts over a more extended period, Chapter 13 provides a court-supervised method to reorganize debt and make repayments more manageable.  

In essence, Chapter 13 is ideal for anyone seeking to resolve their debt issues while maintaining control of their assets and who can commit to a repayment plan based on their regular income and expenses. At Lyndon Ruhnke, P.C., I pride myself on delivering personalized, compassionate service to each client, making sure I explore all options to secure a brighter financial future. 

How to Qualify for Chapter 13

To be eligible for Chapter 13 bankruptcy, you must satisfy certain requirements that prove your ability to follow through with your suggested repayment strategy: 

• You must have a steady source of income. This can be in the form of wages, self-employment income, rental property income, or regular government benefits. 

• Your secured and unsecured debts must not exceed the maximum limits. As of April 2021, those seeking to file for Chapter 13 bankruptcy cannot have more than $419,275 in unsecured debt (e.g, credit card debt) and $1,257,850 in secured debt (e.g., mortgage and car loans). 

• You must have filed your current taxes. To file for Chapter 13 bankruptcy, you must have completed your most recent federal and state tax returns and submitted them to the IRS. 

• You must complete a court-approved credit counseling course. Before filing for Chapter 13 bankruptcy, debtors must complete an approved credit counseling course within six months of the filing date. 

If you meet these requirements, it may be time to speak with an experienced bankruptcy attorney at Lyndon Ruhnke, P.C. I can help determine if Chapter 13 is right for you and guide you through the filing process.