Chapter 13 Bankruptcy
(Disclaimer: The information contained in this FAQ is provided for general information purposes only and is not intended to be a legal opinion, legal advice or a complete discussion of the issues related to the area of consumer bankruptcy. Every individual's factual situation is different and you should seek independent legal advice from an attorney familiar with the laws of your state or locality regarding specific information.)
The Bankruptcy Code is divided into chapters. The chapters which almost always apply to consumer debtors are chapter 7, known as a "straight bankruptcy", and chapter 13, which involves an affordable plan of repayment.
An important feature applicable to all types of bankruptcy filings is the automatic stay. The automatic stay means that the mere request for bankruptcy protection automatically stops and brings to a grinding halt most lawsuits, repossessions, foreclosures, evictions, garnishments, attachments, utility shut-offs, and debt collection harassment. It offers debtors a breathing spell by giving the debtor and the trustee assigned to the case time to review the situation and develop an appropriate plan. In most circumstances, creditors cannot take any further action against the debtor or the property without permission from the bankruptcy court.
In a chapter 13 case, the debtor puts forward a plan, following the rules set forth in the bankruptcy laws, to repay certain creditors over a period of time, usually from future income. A chapter 13 case may be advantageous in that the debtor is allowed to get caught up on mortgages or car loans without the threat of foreclosure or repossession, and is allowed to keep both exempt and nonexempt property. The debtor's plan is a document outlining to the bankruptcy court how the debtor proposes to dispose of the claims of the debtor's creditors. The debtor's property is protected from seizure from creditors, including mortgage and other lien holders, as long as the proposed payments are made and necessary insurance coverage remains in place. The plan generally requires monthly payments to the bankruptcy trustee over a period of three to five years. Arrangements can be made to have these payments made automatically through payroll deductions.
The disadvantage of filing for personal bankruptcy is that a record of this stays on the individual's credit report for 10 years. During the Chapter 13 case the debtor is not permitted to obtain additional credit without the Chapter 13 Trustee's permission. Moreover, creditors may not be willing to risk lending money to such an individual. However, this disadvantage is not unique to Chapter 13; it may also apply to individuals currently in a Chapter 11 case or those who are in or have recently been in a Chapter 7 case.
The advantages of Chapter 13 over Chapter 7 include: the ability to stop foreclosures and to have a mortgage that has been accelerated declared reinstated upon bankruptcy plan completion; to achieve a discharge of debts of kinds not dischargeable under Chapter 7; to value collateral; and in some cases; to prevent collection activities against non-filing co-signers (co-debtors) during the life of the case.
A Chapter 13 plan is a document filed with or shortly after a debtor's Chapter 13 bankruptcy petition. The plan details the treatment of debts, liens, and the secured status of assets and liabilities owned or owed by the debtor in regard to his bankruptcy petition filed in United States Bankruptcy Court. For the plan to be confirmed by the court, it must, at a minimum, meet all of the following tests:Commit every penny of the debtor's household's disposable income to the Chapter 13 Plan for at least three years (unless a 100% repayment of all unsecured debt will occur in less than three years), or up to five years, but longer than three years only if the debtor elects it or if your are over the medium income for your state and do not other pass a means test. Provide that unsecured creditors will receive at least as much through the Chapter 13 Plan as they would in a Chapter 7 liquidation. Provide a meaningful payback to the unsecured creditors. In some districts and divisions this means as little as a one cent on the dollar payback.
In Chapter 13 you can usually keep your property, but you must earn wages or have some other source of regular income and you must agree to pay part of your income to your creditors. And you must be able to pay your monthly living expenses, and make your payment to a Chapter 13 Trustee as well. The Court must approve your repayment plan and your budget. A trustee is appointed and will collect the payments from you, pay your creditors, and make sure you live up to the terms of your repayment plan.
Chapter 13 Bankruptcy generally permits individuals to keep all of their property by repaying creditors out of their future income. Each Chapter 13 Bankruptcy debtor files a plan of repayment, which must be approved by the Court. In a bankruptcy plan most creditors will be prohibited from collection their claims from the debtor and will receive a pro rata share of whatever the debtor contributes to the plan of repayment. The debtor makes regular payments to a Chapter 13 trustee in the amounts set forth in their plan. Under this Chapter, a debtor who has a regular income will turn over a part of the income to a trustee who will use it to pay off all or a portion of the debtor's debts over a period normally of 3 years but not exceeding five years. Debtors' receive a discharge after they compete their Chapter 13 repayment plan, and for any amount remaining the debtor is released from most liability and the debt becomes discharged.
Debts that are generally consolidated in a Chapter 13 are mortgage arrears, balances on vehicle loans, student loans, credit card debts and other unsecured debts. All outstanding debts must be included in the Chapter 13 consolidation.
Unlike a Chapter 7 Bankruptcy case, a Chapter 13 Bankruptcy case may be dismissed upon request of the debtor at any time without prior notice to creditors and a hearing in Court. Creditors will be notified of such a dismissal. Some protection may be given to co-debtors.
Chapter 13 Bankruptcy is available to individuals with regular income whose debts do not exceed certain debt limits which change from time to time.
The Law Office of Douglas L. Barrett, LLC is designated as a Federal Debt Relief Agency by an Act of Congress and the President of the United States. We are proud to assist good people in bad situations file for protection under the U.S. Bankruptcy Code.
The Bankruptcy Code is divided into chapters. The chapters which almost always apply to consumer debtors are chapter 7, known as a "straight bankruptcy", and chapter 13, which involves an affordable plan of repayment.
An important feature applicable to all types of bankruptcy filings is the automatic stay. The automatic stay means that the mere request for bankruptcy protection automatically stops and brings to a grinding halt most lawsuits, repossessions, foreclosures, evictions, garnishments, attachments, utility shut-offs, and debt collection harassment. It offers debtors a breathing spell by giving the debtor and the trustee assigned to the case time to review the situation and develop an appropriate plan. In most circumstances, creditors cannot take any further action against the debtor or the property without permission from the bankruptcy court.
In a chapter 13 case, the debtor puts forward a plan, following the rules set forth in the bankruptcy laws, to repay certain creditors over a period of time, usually from future income. A chapter 13 case may be advantageous in that the debtor is allowed to get caught up on mortgages or car loans without the threat of foreclosure or repossession, and is allowed to keep both exempt and nonexempt property. The debtor's plan is a document outlining to the bankruptcy court how the debtor proposes to dispose of the claims of the debtor's creditors. The debtor's property is protected from seizure from creditors, including mortgage and other lien holders, as long as the proposed payments are made and necessary insurance coverage remains in place. The plan generally requires monthly payments to the bankruptcy trustee over a period of three to five years. Arrangements can be made to have these payments made automatically through payroll deductions.
The disadvantage of filing for personal bankruptcy is that a record of this stays on the individual's credit report for 10 years. During the Chapter 13 case the debtor is not permitted to obtain additional credit without the Chapter 13 Trustee's permission. Moreover, creditors may not be willing to risk lending money to such an individual. However, this disadvantage is not unique to Chapter 13; it may also apply to individuals currently in a Chapter 11 case or those who are in or have recently been in a Chapter 7 case.
The advantages of Chapter 13 over Chapter 7 include: the ability to stop foreclosures and to have a mortgage that has been accelerated declared reinstated upon bankruptcy plan completion; to achieve a discharge of debts of kinds not dischargeable under Chapter 7; to value collateral; and in some cases; to prevent collection activities against non-filing co-signers (co-debtors) during the life of the case.
A Chapter 13 plan is a document filed with or shortly after a debtor's Chapter 13 bankruptcy petition. The plan details the treatment of debts, liens, and the secured status of assets and liabilities owned or owed by the debtor in regard to his bankruptcy petition filed in United States Bankruptcy Court. For the plan to be confirmed by the court, it must, at a minimum, meet all of the following tests:Commit every penny of the debtor's household's disposable income to the Chapter 13 Plan for at least three years (unless a 100% repayment of all unsecured debt will occur in less than three years), or up to five years, but longer than three years only if the debtor elects it or if your are over the medium income for your state and do not other pass a means test. Provide that unsecured creditors will receive at least as much through the Chapter 13 Plan as they would in a Chapter 7 liquidation. Provide a meaningful payback to the unsecured creditors. In some districts and divisions this means as little as a one cent on the dollar payback.
In Chapter 13 you can usually keep your property, but you must earn wages or have some other source of regular income and you must agree to pay part of your income to your creditors. And you must be able to pay your monthly living expenses, and make your payment to a Chapter 13 Trustee as well. The Court must approve your repayment plan and your budget. A trustee is appointed and will collect the payments from you, pay your creditors, and make sure you live up to the terms of your repayment plan.
Chapter 13 Bankruptcy generally permits individuals to keep all of their property by repaying creditors out of their future income. Each Chapter 13 Bankruptcy debtor files a plan of repayment, which must be approved by the Court. In a bankruptcy plan most creditors will be prohibited from collection their claims from the debtor and will receive a pro rata share of whatever the debtor contributes to the plan of repayment. The debtor makes regular payments to a Chapter 13 trustee in the amounts set forth in their plan. Under this Chapter, a debtor who has a regular income will turn over a part of the income to a trustee who will use it to pay off all or a portion of the debtor's debts over a period normally of 3 years but not exceeding five years. Debtors' receive a discharge after they compete their Chapter 13 repayment plan, and for any amount remaining the debtor is released from most liability and the debt becomes discharged.
Debts that are generally consolidated in a Chapter 13 are mortgage arrears, balances on vehicle loans, student loans, credit card debts and other unsecured debts. All outstanding debts must be included in the Chapter 13 consolidation.
Unlike a Chapter 7 Bankruptcy case, a Chapter 13 Bankruptcy case may be dismissed upon request of the debtor at any time without prior notice to creditors and a hearing in Court. Creditors will be notified of such a dismissal. Some protection may be given to co-debtors.
Chapter 13 Bankruptcy is available to individuals with regular income whose debts do not exceed certain debt limits which change from time to time.
The Law Office of Douglas L. Barrett, LLC is designated as a Federal Debt Relief Agency by an Act of Congress and the President of the United States. We are proud to assist good people in bad situations file for protection under the U.S. Bankruptcy Code.
