According to a Gurnee bankruptcy attorney, vehicles can be treated differently inside a Chapter 13 bankruptcy case. If you have a financed vehicle, then it must be paid, in my opinion, through the Chapter 13 bankruptcy plan. In other words, the total amount owed on that vehicle is going to be paid through the Chapter 13 plan over the life of the plan. If the auto is purchased more than two and a half years ago, we can then reduce the interest rate that the trustee is going to pay, and we can change the secured portion that the trustee’s going to pay on that vehicle. If the vehicle has been purchased within the last two and a half years, then the auto finance company is entitled to the contract rate of interest and the full contract value. So depending upon when the car was purchased prior to the time you file Chapter 13 bankruptcy, will affect how that vehicle is treated and to what interest rate it is paid.
Chapter 13 is also great for paying back non-dischargeable debt, such as student loans, recent taxes, parking tickets, child support, alimony payments. These debts are not eliminated in a Chapter 7, but they can be reorganized and repaid over time in a Chapter 13.
After your Chapter 13 bankruptcy case is filed, you are going to meet with the Chapter 13 trustee at a meeting called the 341 meeting of creditors. At this meeting, the trustee will be present as well as the debtor and the debtor’s Chapter 13 bankruptcy lawyer and the trustee will ask the debtor under oath a series of questions regarding the bankruptcy petition. Remember, the bankruptcy petition contains all the information about the debtor’s income, expenses, assets, liabilities, and statement of financial affairs. The Chapter 13 trustee’s duty is to make sure that the debtor is providing all of his disposable income towards the Chapter 13 plan. Thus, the Chapter 13 trustee is going to examine the debtor under oath to make sure that the income and the expenses that we’ve budgeted are reasonable. For example, if we put down $800.00 for food for a month for a family of two, the trustee is going to object to that amount, stating that it’s too high. So we want to make sure that our expenses are reasonable under IRS guidelines so that the Chapter 13 trustee doesn’t raise an issue or object.
Since Chapter 13 is quite difficult, I do not recommend that you file bankruptcy yourself. You simply will find the process too difficult to navigate without good counsel.