Filing Chapter 13 in West Virginia

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Chapter 13 bankruptcy allows debtors to restructure their debt and repay it over a three to five year period. Chapter 13 bankruptcy is ideal for West Virginia debtors who have substantial assets they wish to retain or for those with assets that have substantial equity. Moreover, Chapter 13 bankruptcy may be an option for debtors who do not qualify for Chapter 7 relief because they are unable to satisfy either the median income test or the means test established by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA).

Chapter 13 Filing Requirements in West Virginia

To qualify for Chapter 13 relief in West Virginia, a debtor must have stable and regular income sufficient to make the required Chapter 13 plan payments. Additionally, the following debt thresholds may not be exceeded:

  • Unsecured debt - $360,475
  • Secured debt - $1,081,400

In addition to the debt limits established in the Bankruptcy Code, Chapter 13 debtors must also:

  • Pay the filing fee. With permission of the bankruptcy court, the filing fee may be paid in installments. The installment plan must consist of no more than four installment payments and the filing fee must be paid in full within 120 days of the date the case was filed.
  • Complete pre-bankruptcy counseling at least 180 days prior to filing the bankruptcy case.

The Chapter 13 Process

A debtor initiates a West Virginia Chapter 13 bankruptcy case by filing the bankruptcy petition, schedules and Chapter 13 plan, and paying the filing fee. Upon filing the bankruptcy petition, the automatic stay immediately goes into effect. The automatic stay prohibits creditors from making any collection efforts against a debtor or his property. Among the creditor actions which are prohibited are:

  • Foreclosure
  • Repossession
  • Filing or prosecuting a lawsuit
  • Wage garnishment
  • Collection phone calls
  • Collection letters

Within about 20 to 50 days after filing a Chapter 13 bankruptcy case, the debtor must attend the 341 Meeting of Creditors. At the meeting of creditors, the debtor will be sworn in by the bankruptcy trustee and the trustee and any creditors who are present will question the debtor about his financial situation, the contents of his bankruptcy petition and the Chapter 13 plan.

Within about 30 days of the Meeting of Creditors, the confirmation hearing will be held. At the confirmation hearing, the debtor will learn whether his Chapter 13 plan will be accepted by the court or not. If the plan is not accepted by the court, the debtor’s case will be dismissed.

How the Chapter 13 Plan Works

The Chapter 13 plan is the debtor’s proposal for repayment of his debts. If a debtor is behind on his mortgage, the arrearage will be paid through the Chapter 13 plan. The debtor must make all mortgage payments (due after the filing of his bankruptcy case) directly to the mortgage company on time each month.

Other secured debts, such as auto loans, must be paid in full during the three to five year repayment period. Certain provisions of the Bankruptcy Code may allow a debtor to reduce the principal balance owed on an auto loan to the vehicle’s present value and/or to reduce the interest rate.

How much of his unsecured debt a Chapter 13 debtor must repay depends on his income, expenses and the composition of this Chapter 13 plan. In some cases, unsecured creditors receive only pennies on the dollar.

Getting Legal Help

Because Chapter 13 bankruptcy does not require a debtor to liquidate his assets, many debtors find it more appealing than Chapter 7 bankruptcy. However, Chapter 13 bankruptcy is complex and requires the knowledge and expertise of a West Virginia bankruptcy attorney. A bankruptcy attorney’s role is to ensure that the petition and schedules are completed properly, that the Chapter 13 plan is feasible, and to represent the debtor in all aspects of the case from filing to discharge.