REORGANIZATION UNDER CHAPTER 13 OF THE BANKRUPTCY CODE

A chapter 13 bankruptcy enables individuals with regular income to develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over 3 to 5 years.

Any individual, even if self-employed, is eligible for chapter 13 relief as long as the individual’s unsecured debts are less than $394,725 and secured debts are less than $1,184,200.

A chapter 13 case begins by filing a petition with required schedules and statement. The debtor is also required to file a 3-5 year repayment Chapter 13 plan offering to pay off all or part of the debts from the debtor’s future income.

Filing the petition under chapter 13 stops most collection actions against the debtor or the debtor’s property, including foreclosure and repossession. Between 21 and 50 days after the debtor files the chapter 13 petition, the chapter 13 trustee will hold a meeting of creditors. In addition to the meeting of creditors, the court will hold one or several confirmation hearings on the proposed Chapter 13 plan of reorganization. The debtor must start making plan payments to the trustee within 30 days after filing the bankruptcy case, even if the plan has not yet been approved by the court.

A chapter 13 debtor is entitled to a discharge upon completion of all payments under the chapter 13 plan. The discharge in a chapter 13 case is broader than in a chapter 7 case. Debts dischargeable in a chapter 13, but not in chapter 7, include debts for willful and malicious injury to property (as opposed to a person), debts incurred to pay nondischargeable tax obligations, and debts arising from property settlements in divorce or separation proceedings

Chapter 13 offers individuals a number of advantages over liquidation under chapter 7. Chapter 13 bankruptcy is generally used by debtors who want to keep secured assets, such as a home or car. Chapter 13 offers individuals an opportunity to save their homes from foreclosure by repayment of the delinquent mortgage payments over time. Where a debtor has valuable nonexempt property and wants to keep it, a chapter 13 may be a better option.

If you have a lot of debts and think that you may be qualified for Chapter 7 or Chapter 13 bankruptcy, begin to solve your problem today by calling Rotstein Law Office by calling us at our office number (206) 579-8823 or by completing the interactive Contact Form.