Chapter 13 Bankruptcy in Miami, Florida

Chapter 13 bankruptcy is a court-supervised repayment plan that lasts three to five years. It is the right tool when you need to keep property that is not fully covered by exemptions, when you need to stop a foreclosure sale and catch up on a mortgage, when your income exceeds the Chapter 7 means-test threshold, or when you want to pay non-dischargeable debt over time without interest and penalties continuing to accrue. At the end of a successful Chapter 13 plan, the court enters a discharge that eliminates whatever unsecured debt was not paid through the plan.

Why People File Chapter 13 Instead of Chapter 7

Common reasons our Miami clients choose Chapter 13:

• To stop a foreclosure and save the house. Chapter 13 lets you cure the entire mortgage arrearage over up to 60 months, with no interest on the arrears, while you make ongoing post-petition mortgage payments. As long as you keep the plan current and the post-petition mortgage current, the foreclosure cannot proceed.
• To strip a wholly unsecured second mortgage or HELOC. If your first mortgage balance exceeds the home's fair market value, the second mortgage is treated as unsecured debt, paid pennies on the dollar (or zero) through the plan, and the lien is removed when the plan completes.
• To cram down a car loan. For vehicles purchased more than 910 days before filing, the loan principal is reduced to the car's fair market value, the interest rate is reduced to the Till rate (currently around prime + 1-3%), and the lender is paid the new amount over the life of the plan.
• To pay non-dischargeable income tax over time. Recent income tax debt is non-dischargeable but must be paid in full as a priority claim through the Chapter 13 plan, with no further interest or penalties accruing.
• Because income exceeds the Chapter 7 means-test limit. Above-median earners can usually only file Chapter 13.
• To protect a co-signer. Chapter 13 includes a co-debtor stay that protects guarantors and co-signers on consumer debts.
• Because there are non-exempt assets the filer wants to keep. In Chapter 13, you keep your property regardless of exemptions, as long as unsecured creditors receive at least as much through the plan as they would have received in a Chapter 7 liquidation.

How a Chapter 13 Plan Is Structured

The Chapter 13 plan is a written document filed with the court that proposes how the filer will pay creditors over three to five years. Below-median income filers typically file 36-month plans; above-median filers must file 60-month plans unless they pay all allowed claims in full.

The plan must do at least the following:

• Pay all administrative expenses (filing fee, attorney's fees not collected up front, trustee's percentage fee) in full
• Pay all priority claims (recent taxes, domestic support, certain other categories) in full
• Pay secured claims at least the value of the collateral, plus interest, unless the debtor surrenders the collateral
• Pay unsecured creditors at least as much as they would have received in a Chapter 7 case (the "best interest of creditors" test)
• Devote all the debtor's projected disposable income to the plan if any unsecured creditor objects (the "disposable income" test, applicable mainly to above-median filers)

Plan payments are made monthly to the standing Chapter 13 trustee, who distributes the funds to creditors according to the plan.

Eligibility for Chapter 13

To file Chapter 13, an individual must:

• Have regular income sufficient to fund a feasible plan
• Have non-contingent, liquidated unsecured debts below the statutory ceiling (currently approximately $526,700 for unsecured and $1,580,125 for secured, with the figures adjusted periodically; check current limits at the time of filing)
• Complete pre-filing credit counseling
• Not have had a prior bankruptcy dismissed within 180 days for specific procedural reasons

Note: only individuals (and sole proprietors) can file Chapter 13. Corporations and LLCs file Chapter 11 instead. See our business bankruptcy page.

The Chapter 13 Timeline

• Day 0: Petition, schedules, and plan filed; automatic stay invoked
• Day 30: First plan payment due to the trustee, even if the plan has not yet been confirmed
• Day 21-50: 341 meeting of creditors
• Day 45-90: Confirmation hearing on the plan
• Months 1-60: Plan payments continue; the trustee distributes funds to creditors
• End of plan: Discharge entered, eliminating whatever unsecured debt was not paid in full

What Happens If Things Change

Life happens. If you lose a job, get divorced, become ill, or experience some other significant change in circumstances during the plan, options include modifying the plan, converting to Chapter 7, or dismissing the case. We help clients navigate those decisions when they arise.

Schedule a Consultation

If you are behind on a mortgage, facing foreclosure, dealing with tax debt, or otherwise considering Chapter 13, call 786-522-1411 or email email@attorneygoodwin.com. We will run the numbers and tell you honestly whether Chapter 13 makes sense.