What is Chapter 13 Bankruptcy?

Bankruptcy is a reorganization plan for individuals. To qualify for Chapter 13, an individual must have secured debts under $807,750 and unsecured debts under $269,750. Under Chapter 13 the debtor keeps all of their property, but in return they make regular payments to a trustee, who distributes the payments to the creditors. Most Chapter 13 plans last for three to five years, and then the remaining unpaid and eligible debts are discharged. The types of debt that can be discharged under Chapter 13 was substantially scaled back by the 2005 reform amendments. Creditors may challenge a Chapter 13 plan but a plan can still be confirmed over their objection if the criteria for confirmation is otherwise met. A requirement for confirmation of a Chapter 13 plan is that unsecured creditors would receive at least as much as they would receive in a Chapter 7 liquidation.

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, this process allows the debtor to use whatever income they may have in the future to pay off the creditors. Needless to say, filing Chapter 13 Bankruptcy is applicable for a debtor who does have a regular income, and thus can afford to request for such adjustments, or reductions.

The United States Bankruptcy Code gives the debtor 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.

How exactly does Chapter 13 Bankruptcy work?

While debtors are allowed to keep all of their property, the court approves a new interest-free plan for repayment. A written plan is put together giving details of all the transactions that will occur, and HOW LONG they have to complete this. The bankruptor much start to repay the debt withing 30-45 days after the case has started. The transitory stage of paying a trustee who then pays a creditor, as in Chapter 7 Bankruptcy is usually eliminated with Chapter 13 Bankruptcy. Although, in some cases people may involve a trustee who would take care of disbursing money to the creditors as per the plan. Also, as per the law the creditors must strictly adhere the repayment plan approved by the court and are in fact prohibited to collect any claims from the debtor. Your attorney will prepare new repayment plan to best suit your situation.

The one advantage of Chapter 13 over Chapter 7 is the full discharge option which is not applicable under Chapter 7 filing. For example, if a debtor manages to complete all necessary payments in the plan, he/she is given a full plan discharge. (There are a few exceptions to this case, which your attorney will guide you about if necessary.) Yet another advantage of the Chapter 13 filing is that a repayment can be created even if creditors disagree with it, as long as it is approved by the Court. Although, in all fairness the court allows creditors also to file an objection, in case they may have any.

Who can file for Chapter 13 Bankruptcy?

Regular Income being #1!

The most important criteria for a person to be able to file for Chapter 13 bankruptcy is that the individual must have a steady job with normal pay. Your attorney will be the best person to introduce other criterias that you will have to floow and he can tell you about these!

How can I file for Chapter 13 Bankruptcy?

Essentially, the filing for Chapter 13 Bankruptcy entails the following.

• Is Chapter 13 the better option?
• Put together a realistic
• Check out other chapter 13 bankruptsies and see if you can take on this endevour with other means
• Determine and implement methods of dealing with secured creditors.
• Devise a chapter 13 plan, and fill out the forms.
• Pay the filing fee and complete the process of filing the forms and pleadings.
• Attend whatever meetings you maybe required to attend; with the creditors, court hearings etc.
• Obtain a discharge once the payments have all been made, and the plan terminated.