What is Chapter 13?
In a Chapter 13 bankruptcy, the debtor is essentially going to the court and asking them for permission to reorganize their liabilities into one lump sum payment. The debtor will take all of their unsecured liabilities as well as any arrearage on their home or automobiles, pile them all together, and propose to the bankruptcy court a plan of repayment. That plan of repayment usually last between 3 and 5 years and when the plan of repayment is over with, the debtor is discharged of all of his or her remaining liabilities. Chapter 13 Bankruptcy is the best option for people who are behind on their homes and about to be foreclosed, have cars that are about to be repossessed, have back child support, back taxes, and even unpaid school loans. View the chapter 13 video above, where an experienced professional explains exactly what Chapter 13 bankruptcy is.
Chapter 13 bankruptcy rules are a little different than other types of bankruptcy. When someone files for bankruptcy under Chapter 13 of the Bankruptcy Code, their aim is to have the opportunity to repay some or all the debts in their name, in better terms, i.e. lower or no interest. Unlike Chapter 7 which involves liquidation of assets, the Chapter 13 process involves restructuring debts which allows the debtor to use whatever income they may have in the future to pay off the creditors. Filing Chapter 13 Bankruptcy is thus applicable for a debtor who has a regular income, and can afford to request for such adjustments or reductions.
The United States Bankruptcy Code gives the debtor a ceiling of 5 years, within which the creditors must be paid back. While the attorney will safeguard your interests, the entire process is carried out under the supervision of the courts.
For more information about Chapter 13 rules, please see Chapter 13 Bankruptcy Questions
Chapter 13 Eligibility Requirements
Are you eligible to file Chapter 13? In order to file under Chapter 13 of the bankruptcy code, a debtor must meet all of the following rule requirements:
- A debtor must live in the United States.
- A debtor must be an individual. Chapter 13 bankruptcy is not available for a corporation, partnership, or other entity.
- A debtor must have reliable income that exceeds their monthly expenses. This extra income, known as disposable income, must exist in order to work out some form of repayment plan to which the debtor's creditors will agree.
- A debtor's unsecured debts (e.g., credit cards, personal loans) must not exceed $360,475 and a debtor's secured debts (e.g., home loans, automobile loans) must not exceed $1,081,400.
- In the previous 180 days, a debtor cannot have had a previous bankruptcy dismissed.
- In the previous 180 days, a debtor must have attended a credit counseling course from an approved agency.
There is a different set of requirements in order for a debt to file under Chapter 7 of the bankruptcy code.
Start the Chapter 13 Process
Find out if you can file Chapter 13 Bankruptcy. Complete the short form below and an Attorney will contact you to answer your questions.