Chapter 13 Bankruptcy Information

Bankruptcy is a step that demands serious consideration. If you make that decision, it is important to review the different types of bankruptcy to determine which is best for you. Bankruptcy in general is governed by the U.S. Government Bankruptcy Code. This Code includes a collection of bankruptcy laws that pertain to all types available. It defines Chapter 13 bankruptcy in terms that makes it most appropriate for someone with regular income who wants to retain some valuable assetsÂ….

What is Chapter 13 Bankruptcy?

The Chapter 13 bankruptcy process will restructure non-exempt debts on better terms over a period of several years, usually 3 to 5 years. It is especially advantageous for debtors who want to stop foreclosure or otherwise keep their house or car. The requirement here is that the individual makes all mortgage payments or car payments according to a plan drawn up by the court. The entire process is supervised by the courts according to Chapter 13 Bankruptcy laws.

Chapter 13 Bankruptcy Rules

While valuable assets can be protected by Chapter 13 bankruptcy, certain other debts will not be discharged. These obligations include taxes, alimony, child support, and government funded or guaranteed loans, as well as a few other types. The debtor will need to make other arrangements to cover those debts.

The debtor and the debtor’s attorney must make up a repayment plan. Then this plan must be submitted to the court where it will be considered at a creditors meeting. If the plan is confirmed by the court, it becomes a legal obligation a specified number of days following the creditors meeting. Once the repayment plan is in force, the debtor will make all payments to the trustee appointed to the case. Next the trustee will distribute the payments to the appropriate creditors.

Chapter 13 Bankruptcy Eligibility

A debtor who chooses Chapter 13 bankruptcy must have a regular income. That means they must receive income at regular periods, weekly or monthly, and that income must be more than sufficient to cover living expenses. Anyone who does not meet this requirement will not be allowed to file for Chapter 13 bankruptcy.

The applicant here must also have unsecured debts of less than approximately $337,000 and secured debts of less than approximately $1,011,000. The most common unsecured debts are medical bills, credit card debts, student loans and child support. Secured debts are those secured by collateral, such as a house or a car and which may be reclaimed by a creditor for non-payment. The debtor also must have received credit counseling in the previous six months from an approved credit counseling service.

Filing for Chapter 13 Bankruptcy

A debtor who intends to file for Chapter 13 Bankruptcy must do so at the court for the area where they live. This process of filing Chapter 13 bankruptcy begins by completing a number of official forms which can be downloaded from the Internet. Then the completed forms must be submitted to the clerk of the court with the required fees of $274. At that time, the debtor also must submit statements of income and expenses, assets and liabilities, any unexpired leases, a statement of finances, and a copy of the most recent tax return.

Within two weeks of filing the petition, the debtor must submit to the court a repayment plan drawn up by them and their attorney. Once the filing is complete and the payment plan approved by the court, creditors may not pursue the debtor for past debts and no one may garnish the debtor’s salary for the debts covered by the plan.

Chapter 13 Bankruptcy Discharge

Once it has been verified that the debtor has: (1) made all payments required by the court-approved plan; (2) all domestic support payments have been paid; (3) has not received an earlier discharge within a certain time period; and (4) has taken an approved financial management course, then the individual’s discharge is complete. Former creditors may not pursue them for the debts now eliminated.

Bankruptcy Lawyer

If you wish to file for bankruptcy as an individual (personal bankruptcy) you can do so under chapter 7 or chapter 13.

A professional bankruptcy attorney will be able to address all of your questions and concerns while also being able to guide you through the entire bankruptcy process. An attorney may practice in only one or many types of bankruptcies and/or chapters. Click here to find a Chapter 13 bankruptcy attorney.