There are many people who want to repay their creditors, however, due to unforeseen hardships such as divorce, high medical bills, loss of a job, etc., they simply cannot repay them on time.
Chapter 13 bankruptcy helps organize those debts while also hanging onto essential assets. Under Chapter 13, the debtor must pay off a part of their debts over the span of a few years. Once their repayment plan is complete, then all debts are forgiven. Chapter 13 cases do take longer to conclude than Chapter 7 cases and they can tend to be a bit more expensive.
In short, filing Chapter 13 may allow you to immediately stop home foreclosure, stop auto repossession, stop wage garnishment, and merge your debts into one monthly payment that you can afford. These debts include, but are not necessarily limited to:
- Missed payments on your mortgage or home equity loan
- Your entire automobile payments
- Past due property taxes
- Past due homeowner association (HOA) dues
- IRS debt owed (depending on age of debt)
- Credit card debt
- Department store debt
- Pay day loan, lines of credit, etc.
- Medical bills
- Debt obligations ordered by a Marital Agreement subject to a Divorce
- Child Support debt
- Student loans
Chapter 13 Bankruptcy FAQs
Am I eligible to file for Chapter 13 bankruptcy?
Any person considering filing for Chapter 13 must meet the following criteria:
- Live in, do business, or own property in the U.S.
- Have a consistent income
- Have unsecured debts that amount to less than $307,675
- Have secured debts that amount to less than $922,975
- Cannot be a stockbroker
- Has not filed or dismissed a bankruptcy case in the 180 days before filing the current case
When is Chapter 13 the better option than Chapter 7?
If you do not qualify for Chapter 7 and you have enough means and income to pay off your unsecured debts, then Chapter 13 is the way to go.
You may also need to go the route of Chapter 13 if you have a large amount of debt not dischargeable under Chapter 7. Chapter 13 is best for those who need temporary relief from creditors so that they can catch up on payments.
What debts are not dischargeable under Chapter 13 bankruptcy?|
With a Chapter 13 repayment plan all debts will be discharged except for the following:
- Debts not included in the plan
- Child support or alimony debts
- Restitution debt owed in a personal injury or wrongful death case
- The majority of tax debt
- Restitution debt associated with a criminal case
- Any debts accumulated during your bankruptcy case (That were not included)
- Debt to creditors who were not informed of the Chapter 13 Case
With Chapter 13, do all debts have to be fully paid?
No. There are certain debts like child support or alimony payments that will need to be paid in full. However, other debts only require you to pay a certain amount that seems reasonable and affordable for the debtor. Any remaining debt may be discharged upon case completion.
When should I start making payments to the Chapter 13 trustee?
Debtors have 30 days from the day their Chapter 13 case is filed to begin making payments in the form of money orders and cashier’s checks to the trustee. Payments must continue every month until the plan is complete.
Do creditors have to approve my Chapter 13 plan?
No. Your plan only needs to be approved by the bankruptcy court. Creditors could file objections which will be brought to the court’s attention.
Contact an Attorney for Chapter 13 Bankruptcy
If you file Chapter 13, you will see that the law gives you greater relief than do other alternatives such as debt negotiation, debt settlement, and credit consolidation. Why continue to suffer the day-to-day stress by trying one of these alternatives when filing Chapter 13 bankruptcy may finally give you the relief that you need to once again enjoy life?