What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is also known as “wage earner” bankruptcy because, in order to file for Chapter 13, you must have a reliable source of income that you can use to repay some portion of your debt. And to qualify for Chapter 13, your secured debts must be less than $922,975 and your unsecured debts less than $307,675. When you file for Chapter 13 bankruptcy you propose a repayment plan that details how you are going to pay back your debts over the next three to five years. The minimum amount you’ll have to repay depends on how much you earn, how much you owe, and how much your unsecured creditors would have received if you’d filed for Chapter 7. If you have secured debts, Chapter 13 gives you an option to make up missed payments to avoid repossession or foreclosure. You can include these past due amounts in your repayment plan and make them up over time. In addition to Chapter 13, there are two other types of reorganization bankruptcy you may have heard of: Chapter 11 and Chapter 12
Chapter 13, which has also been known as a wage earner’s plan, is an interest-free repayment plan where a debtor repays at least some of his or her unsecured debts with regular payments over five years. Under the new bankrtupcy law, effective for filings on and after October 17, 2005, more bankrtupcy filers will have to choose Chapter 13’s repayment plan because of the application of a complicated, two-part means test. Generally the creditors expect to get more than they would have received from the debtor’s estate if the debtor had sought a complete liquidation under Chapter 7 Bankruptcy. One of the important benefits of Chapter 13 is that the debtor generally can more easily continue to live in his or her home. If thedebtor fails to comply with the Chapter 13 plan, the Courtwill usually dismiss the bankruptcy case Another advantage of Chapter 13 is that it allows individuals to reschedule secured debts (other than a mortgage for their primary residence) and extend them over the life
Chapter 13 bankruptcy is a debt repayment proceeding. The debtor turns over a specified portion of his/her future earnings to the Chapter 13 trustee, who then distributes dividends (payments) to creditors who have filed bona fide claims. The method of determining the dividend distribution is determined by a Chapter 13 Plan which is filed with the Bankruptcy Court by the Debtor. The debtor receives a discharge of all dischargeable debts after the Plan is completed and all payments under the Plan have been made. It is important that the debtor comply with all provisions of the plan and comply with all orders of the court. It is also necessary that the debtor pay all domestic support obligations, including maintenance and child support, before he or she may receive a discharge. Keep in mind that the debtor must complete the debtor education course before the final payment is made to the Trustee.
Chapter 13 Bankruptcy is similar to a debt adjustment. Under a Chapter 13, the filer puts together a 3-5 year plan with the goal of paying off part or all of the debts from the filer’s projected future income. You must have a current source of income along with some disposable income in order to qualify for filing under Chapter 13. Like Chapter 7, a Chapter 13 bankruptcy can only be filed by an individual.
Chapter 13 bankruptcy is a debt repayment proceeding. The debtor turns over a specified portion of future earnings to a Chapter 13 trustee (hereinafter “the trustee”), who then distributes the money according to a confirmed plan to creditors who have filed bona fide claims. The method of determining the dividend distribution is determined by the Chapter 13 plan, which is filed with and confirmed or not confirmed, by the Bankruptcy Court (hereinafter “the Court”). If the debtor completes the plan, the debtor receives a discharge of all dischargeable debts.
