Chapter 13 Bankruptcy
Learn how Chapter 13 bankruptcy works including eligibility, the process, mandatory courses, and the Chapter 13 repayment plan.
All "chapters" of bankruptcy can stop garnishments, harassing phone calls, collections, foreclosures and lawsuits. This is usually referred to as the “automatic stay.” However, if you had a case dismissed within the past year, the "automatic stay" may not apply.
What is Chapter 13 Bankruptcy?
Chapter 13 is available only to individuals and couples with regular incomes. Businesses do not qualify. In exchange for keeping property, the debtor makes payments to the court which then pays the creditors a pre-determined percentage.
What is a Chapter 13 Plan?
The "Chapter 13" plan refers to the amount you will pay to the Court, the percentage each creditor will receive and the length of the payments. The amount paid each month is based on your monthly income and expenses and will generally last 36 to 60 months. Generally, the monthly payment is automatically deducted from your paycheck. Unsecured creditors, such as credit cards companies, may get paid as little as one percent (1%) of the amount owed.
Can you keep your house or car?
If the foreclosure sale is not complete or the repossessed car has not been sold, you may be able to keep your house or car. The arrearages will generally be paid through the court so long as you maintain your regular monthly payments. Unfortunately, leases must generally be current to keep the property.
Who typically files Chapter 13?
Individuals or couples that are behind on their house or car payments can use Chapter 13 to "catch-up" on their arrearages. Additionally, people who are at risk of losing certain property in Chapter 7 cases may want to consider filing Chapter 13 instead.
Is credit counseling required?
Individual debtors with primarily consumer debts are now required to complete credit counseling before they are eligible to file under the Bankruptcy Code. Not all counseling services qualify. Our office can assist you with making the appropriate arrangements.
How often can you file a Chapter 13 case?
If you obtained a discharge in a Chapter 13 case within the past two years, or a discharge in a Chapter 7, 11 or 12 case within the past four years, you will not be eligible for a Chapter 13 discharge. If more time has elapsed since your last filing, you are eligible. However, even if you do not qualify for a discharge, you may be able to file for limited protection under the Bankruptcy Code. There is no time restriction other than good faith.
For an analysis of whether Chapter 13 is right for you or your business, please contact our office for an appointment.