Interviewer: What are some of the most common misconceptions people have about chapter 13?
James Logan: In bankruptcy, in general, is they’re going to lose everything they own and that’s absolutely not true. The attorney’s job in a bankruptcy is to make sure you don’t lose anything, whether it’s a chapter 7 or a chapter 13. The second big misconception is that bankruptcy is going to ruin your credit, and that’s absolutely not true. Bankruptcy, in most cases, will actually improve your credit after filing.
A Step by Step Breakdown of the Bankruptcy Process in Maryland
Interviewer: What are the steps of the process after I meet and bring you the necessary paperwork? What’s going to happen from there and how long does that process take?
James Logan: It can all be done very quickly because many times people are calling to stop a foreclosure which may be is as soon as a day or two away but the first step is to meet with us, collect all your documents, figure out what the best course of action is, the next thing you must do is there’s a pre-filing credit course that must be done before you can file a bankruptcy case. The course, you can do it online or over the phone and it’ll take you about an hour to do and we’ll obviously help you to get all that done. We’ll put all the paperwork together to review it and sign it and then we file them with the court.
A Chapter 7 is Generally Discharged 60 Days After the Meeting of Creditors Whereas a Chapter 13 Can take 3 to 5 Years to Discharge
Then once the case is filed with the court, the next step is you’ll go to what’s called the meeting of creditors and depending on whether it’s a chapter 7 or chapter 13, we’ll discuss with you ahead of time what you need to say and what documents you need to bring. If it’s a chapter 7 case, after the meeting of creditors, you’re pretty much done and in most cases, we’ll get you discharge 60 days after the meeting of creditors. And in chapter 13, you’ll have to make your payments anywhere from 3 to 5 years before we get you discharge. And that’s pretty much the process from start to finish.
Chapter 13 Bankruptcy Plans Generally Run from 3 to 5 Years
Interviewer: What’s the standard amount of time that it takes, that someone should have been on the bankruptcy on the plan and could it be extended as well?
James Logan: Chapter 13 plans can run anywhere from 36 to 60 months, 3 to 5 years. They can’t run longer than that and if you haven’t made all the payments by 60 months, sometimes the trustees will move to dispose the case. They can’t run shorter than that – actually, I have cases less than 36 months – but most cases, you want to make the payments over 60 months because you’re paying your creditors back at 0 per cent interest so you may as well stretch it out as long as you can and save any extra money for one that the car breaks down or the kids need braces or any of the other emergencies that come up in real life.
If a Person Suffers a Misfortune and Cannot Make Payments on a Chapter 13, it Can be Converted to a Chapter 7
Interviewer: What happens if someone’s financial situation worsens temporarily while they’re on plan?
James Logan: Unfortunately it’s not uncommon in a chapter 13 because they go on for 3 to 5 years where something will happen where someone loses a job or gets sick or gets in an accident during that time period and he can’t afford to make the payments anymore. Many times we can convert the chapter 13 to chapter 7 and wipe out any debts that they have. Depending on many different factors, where they are with the house, we may able to just still file another chapter 13 to try to save the house.