Chapter 13 Bankruptcy Information
Chapter 13 allows people with a steady income to keep property, like a mortgaged house or a car, that they might otherwise lose through the bankruptcy process.
In Chapter 13, the court approves a repayment plan that allows you to use your future income to pay off your debts during a three-to-five-year period, rather than surrender any property. After you have made all the payments under the plan, you receive a discharge of your debts.
What is Chapter 13 Bankruptcy?
Chapter 13 grants an individual the opportunity to repay some or all of the debts over time and under better conditions. While Chapter 7 requires that you surrender your nonexempt property to the trustee, who can then sell it and distribute the proceeds to creditors, Chapter 13 allows you to keep your property and repay your debts out of your income.
The United States Bankruptcy Code gives the debtor a limit of 5 years to pay back his or her creditors and the entire process is carried out under the supervision of the courts.
Who can file for Chapter 13?
Chapter 13 bankruptcy is certainly not for everyone. Not only must you be able to pay for your monthly living expenses, but you must also be able to meet your court-mandated payment obligations. If your income is minimal or inconsistent, or if your total debt is too high, the court may forbid you from filing Chapter 13.
In order to be eligible for Chapter 13, you must be:
» 75 percent of weekly earnings.
» 75 percent of weekly earnings.
» 75 percent of weekly earnings.
Chapter 13 bankruptcy is best-suited for people who:
Are behind on payments on secured property that they want to keep.
» Many people file Chapter 13 bankruptcy petitions specifically to stop foreclosure or vehicle repossession, but Chapter 13 may be equally useful for catching up on other secured debts while keeping the property that secures the debt.
Have debts that are not too high.
» You do not qualify for Chapter 13 bankruptcy if you have secured debts exceeding $1,010,650 or unsecured debts exceeding $336,900.
They have tax debts that cannot be discharged in a Chapter 7 bankruptcy case.
» Certain tax debts are non-dischargeable but some may be included in a Chapter 13 repayment plan and paid over time.
They have non-exempt property that they want to keep.
» In a Chapter 7 bankruptcy case, non-exempt property can be liquidated (sold) for the benefit of creditors, but in a Chapter 13 repayment plan, the debtor maintains his or her property while making scheduled payments.
They wish to protect co-signers on certain debts.
» In a Chapter 7 bankruptcy case, a co-signer remains liable for a debt even if that debt has been discharged for the primary debtor. However, if a debt is included in a Chapter 13 repayment plan, the co-signer is protected so long as the debtor complies with the plan.
They have past-due student loan debt.
» Student loans are not dischargeable in a Chapter 7 bankruptcy case except under certain very narrow circumstances, but some student loan debt may be included in a Chapter 13 repayment plan.
To learn more about Chapter 13 bankruptcy and how it may help in your situation, fill out the free form below to receive a case evaluation from a local bankruptcy attorney.
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