Chapter 13

What is Ch13?
Chapter 13 bankruptcy is a plan for wage earners who wish to repay their debts in an organized way. It includes a provision for cramdown repayment. Cramdown repayment is where the debtor’s secured debt is stripped down to the value of the property. For example, if a debtor owes a bank $10,000 on a car, and the value of the car is $8,000, the debt is reduced to $8,000.

An individual may file for Chapter 13 bankruptcy as long as the individual is willing to submit a payment plan that is acceptable to the judge. Eligibility criteria include the following:

  • You must be an individual or file jointly with a spouse
  • You must have income from a job
  • You must not have unsecured debt in excess of $307,000
  • You must not have secured debt in excess of $922,000
  • Corporations, partnerships, commercial enterprises, stock brokers or commodity brokers are not eligible for Chapter 13 bankruptcy

How long does it take?
A Chapter 13 bankruptcy proceeding can take three to five years.

What are the steps involved in Ch13

What documents will I need?                                      
In order to file a Chapter 13 bankruptcy, you need to file:

  • A petition
  • A repayment plan. This plan may or may not be acceptable to the creditors but as long as the judge approves it, it becomes valid. If a plan includes starting the payments within 30 days of filing and completing all the payments within three to five years, most judges accept the plan
  • Statement of assets and liabilities
  • Income and expense statement, including sources of income
  • List of contracts, such as lease or rental agreement
  • Copy of the most recent tax return

Will I become debt free at the end of Ch13?
A judge may approve a reduce payment plan. Once the payments are all completed according to the plan, the reduction portion is discharged. If you fail to make payments according to the plan, or fail to obtain modification, then the reduction will not be discharged.

How will Ch13 filing affect my credit?
Chapter 13 affects your credit rating in much the same way as it does by filing a Chapter 7 bankruptcy.

Ch13 FAQs

Coming soon...

Bankruptcy Law Chapter 7 Chapter 11 Chapter 12 Chapter 13

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