01 Chapter 13 Bankruptcy: Everything You Need To Know

Residents of Georgia that file for bankruptcy protection under Chapter 13 will be expected to put forward a sound debt repayment plan. A Bankruptcy attorney can develop a court-supervised plan for an individual debtor with a regular source of income. The detailed plan must outline how creditors will be repaid during the forthcoming three to five years. The plan will be based on income, debt and the amount unsecured creditors would have received if you had chosen to file for bankruptcy under Chapter 7.

02 What is Chapter 13 Bankruptcy?

Debt often grows slowly over time, even if you’re making a regular income. If you are not proactive and cognizant about handling it, before you know it, your debt can get out of hand and become an overwhelming, all-consuming area of your life. A Chapter 13 bankruptcy is a legal way of dealing with the debts you may have and relieving financial stress. In some ways, it is similar to Chapter 7 bankruptcy but also has some differences that make it a better or the sole option for some debtors.

Chapter 13 allows for the reorganization of debts but does not require the liquidation of assets to pay for debts. It allows you to keep your property and gives you additional time to repay what you owe, usually over three to five years.

The decision to file any type of bankruptcy should never be taken lightly. Filing can impact your ability to obtain financing in the future, but it can also drastically and rather quickly improve your quality of life. If you want to learn more about Chapter 13 bankruptcy and if it might be a viable option for your financial situation, don’t wait to contact an experienced Atlanta bankruptcy attorney. Waiting too long to do something about your debt could make your situation worse.

03 Who is Right for Chapter 13?

A Chapter 13 bankruptcy is not a one-size-fits-all solution. It is an ideal answer for some, and for others, it simply will not work. Chapter 13 bankruptcy filers must be committed to the long-term success of their plan by ensuring they can make their repayment plan work.

Before determining if a Chapter 13 is right for you, you should and consult with a knowledgable Atlanta bankruptcy lawyer consider several factors.  For instance, if a debtor owes debts that are not dischargeable in a Chapter 7 bankruptcy, a Chapter 13 will at least give them more time to pay these debts.

If a debtor has liens that are of higher value than the assets that secure the debt, they may want to consider a Chapter 13 bankruptcy over Chapter 7.  Debtors who are behind on their house or car payments, have assets that are worth more than their available exemptions, or are repaying retirement fund loans may find that a Chapter 13 bankruptcy is their only option.

Benefits of Filing

The specific benefits of filing this type of bankruptcy include:

  • Gives you more time to pay debts
  • You may not owe the full debt
  • You get to keep property while you are making payments on it
  • You can begin rebuilding your credit sooner
  • Stops phone calls and other communications from creditors and debt collectors
  • Stops other actions to collect debt such as repossessions, wage garnishments, bank levies, and foreclosures


The same debts that are not dischargeable in Chapter 7 bankruptcies are also not dischargeable in Chapter 13 bankruptcies, including student loan debt, alimony, child support, taxes, and other court-ordered payments. You are still required to pay these debts in full, but with a Chapter 13 bankruptcy, they can be included in your repayment plan, which gives you more time to pay them as opposed to not filing Chapter 13 at all.

In bankruptcy, debtors are legally allowed to exempt some of their property from being sold by the trustee or from having to pay the trustee for it in their plan. Debtors who decide to file Chapter 13 bankruptcy are entitled to the same exemptions that Chapter 7 debtors are under Georgia Code § 44-13-100.

Different values apply to categories of exemptions such as jewelry, health aids, public aid, bikes, tools of the trade, and motor vehicles. If you are concerned with losing your property in a bankruptcy filing, be sure to discuss this with a well-versed Chapter 13 bankruptcy attorney in Atlanta. You may find that you do not have to part with your property in order to receive bankruptcy protection.

04 Consider Chapter 13 If…

You own numerous non-exempt assets that you would be unable to keep under the Chapter 7 laws. Your future income will fund the proposed repayment plan, so under Chapter 13 you will not have to relinquish ownership of a property.

You are unable to negotiate a payment plan with the IRS to repay a significant amount of back tax.

A court-supervised plan to settle the debt would be beneficial

An experienced Chapter 13 Attorney will be able to support your cause. Chapter 13 bankruptcy laws are complex, but the Cornwell Law Firm will analyze your situation and create a manageable Chapter 13 repayment schedule.

05 Restrictions on Cram-downs

It is important to note that a car loan on a new or used auto cannot be crammed down if the vehicle was bought thirty months before filing for bankruptcy. Personal property is also subject to other cram down restrictions.

06 How Much Does Chapter 13 Cost?

Despite being a financial solution, Chapter 13 bankruptcy does come with some costs. You will need to pay a fee for the services of your Atlanta bankruptcy attorney. In addition, a $235 filing fee to the bankruptcy court and a $75 miscellaneous administrative fee must be paid.

It is essential to understand that a Chapter 13 bankruptcy involves a repayment plan to pay off some or all of your debts. You will also pay a fee to your trustee within your Chapter 13 repayment plan.

07 The Means Test in a Chapter 13 Bankruptcy

The means test is used in Chapter 7 bankruptcy to determine what type of bankruptcy debtors have the option to file. In a Chapter 13 bankruptcy, the means test is used to decide what you will need to pay your creditors within your repayment plan. Although it is not an identical test, it still uses a standardized formula to calculate how much relief a debtor will receive from filing for bankruptcy.

Chapter 13 uses form b-22C to calculate the debtor’s projected monthly disposable income. This test helps ensure that creditors in a Chapter 13 filing get at least as much as they would have if the debtor were to file a Chapter 7 bankruptcy instead.

08 Chapter 13 Alternatives

Anyone considering filing a Chapter 13 bankruptcy should be aware of their alternatives so that they can make the best financial choice for themselves and their family. Viable alternatives that are worth looking into for many debtors include:

Non-profit credit counseling services exist to help you review your financial situation and help you explore the various solutions that may exist to pay or reduce your debts. Often, churches, charitable organizations, and government agencies have credit counseling services available at no charge.

Devising an individualized plan for managing your debt either on your own or with the help of a credit counselor can help you determine which debts to pay first or how to apply your income to your debts. Face-to-face meetings with debt managers or online tools can help you craft your plan. Debt management strategies usually incorporate paying down high-interest debts first to help decrease the total amount of interest you pay.  On average, a debt management plan can take between three and five years to complete and do require the commitment of the debtor to complete.

Debt consolidation companies negotiate with your creditors to come up with a plan to consolidate your debts. For example, if you have several credit cards with balances, a debt consolidation company can arrange a plan that makes it possible for you to make one payment per month instead of multiple ones.

The practice of debt settlement is often lucrative to creditors as opposed to their debtor filing for bankruptcy because they would rather take reduced payments as opposed to minimal payments or none at all if the debtor files for bankruptcy. They are more in control of the situation when the debtor attempts a debt settlement over a Chapter 13 bankruptcy. In a debt settlement situation, a debt settlement firm negotiates with your creditors to reduce the total amount of debt owed and to create a payment plan that you can commit to and complete.

Finally, doing nothing is always an option, though usually, it is not a great one.  Doing nothing about your debt as an alternative to a Chapter 13 bankruptcy could lead to losing your home or other property in foreclosure, having vehicles or other possessions repossessed, garnishments, bank levies, as well as destroy your credit score for a long time to come.

09 How to File for Chapter 13

The first step to filing a successful Chapter 13 bankruptcy is to hire a skilled bankruptcy attorney in Atlanta. Attorney Keith Cornwell could review your financial and life circumstances to help you to determine if a Chapter 13 is right for you. If so, you will provide the firm with all the information and documentation they need to file your bankruptcy. They will need to see:

  • Tax returns
  • Bank statements
  • Credit card statements
  • Pay stubs
  • Mortgage statements
  • Any active contracts you have
  • A breakdown of your monthly living expenses
  • Other forms of financial documentation

Attorney Cornwell will file your case with the local bankruptcy court after receiving all the information and documentation he needs. If your case filing is an emergency situation, for instance, if it is being done to stop a foreclosure or a garnishment, the attorney may be able to file without some of this information but will need it as soon as possible.

Next, with the assistance of your Atlanta Chapter 13 bankruptcy attorney, you must come up with a payment plan that you can complete. Your plan will be presented to the bankruptcy judge or administrator as well as your creditors. The plan must meet the requirements established within the bankruptcy code.

Although the court has the final approval power, creditors can object if they feel that somehow the plan is unfair to them. Similar to a Chapter 7 bankruptcy, creditors are not allowed to have direct contact with Chapter 13 bankruptcy debtors.

Within 180 days of filing the Chapter 13 bankruptcy petition, the debtor must take a credit counseling course from a court-approved agency. If this step is not completed within the timeframe, the case could be dismissed.

10 Our Services

Financial stress and burdens have become an American way of life for many. Whether your circumstances are the result of bad decisions, bad luck, or both, we are here to help you. Our non-judgmental and compassionate staff know how stressed and worried potential bankruptcy filers can be, and we want to make this challenging time easier for you. You place your trust in our firm, and that fact is not lost on our staff. We will work to ensure you have the knowledge to make the best decisions for your financial future and that your information is kept confidential.

Call an Experienced Chapter 13 Bankruptcy Attorney in Atlanta Today

You do not have to continue to worry about how you will pay your debts any longer. Call our office today at 404-476-8644 to schedule your Chapter 13 bankruptcy consultation with Attorney Keith Cornwell or fill out our online contact form. Remember that the sooner you reach out, the more successful your bankruptcy filing could be.

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