Chapter 13 Bankruptcy
In 2013, approximately 300,000 Americans filed for Chapter 13 bankruptcy, which represents about 30% of all bankruptcies. Chapter 13 bankruptcies are a type of reorganization proceeding that encourage consumers to repay as much of their outstanding debt as possible. Repayment usually lasts three to five years and require that a person has a regular income. Provided that a person makes all scheduled payments throughout the time period specified by a court of law, any debts remaining unpaid at the end of the process will be discharged.
Advantages to Chapter 13 Bankruptcy
There are some distinct advantages to Chapter 13 bankruptcy, which include the following:
- Attorneys fees are often paid through Chapter 13 bankruptcy, which makes it less costly to file.
- Chapter 13 bankruptcy stops foreclosures.
- If a motor vehicle was purchased more than 910 days prior to bankruptcy, Chapter 13 bankruptcy allows individuals to pay off only what the car is worth at an established interest rate.
- Non-exempt assets are protected in Chapter 13 bankruptcy.
- Special protection is offered for co-signers of consumer debt in Chapter 13 bankruptcy.
- Tax debts can be paid off through Chapter 13 bankruptcy.
Applying for Chapter 13 Bankruptcy
Any person including individuals who are self-employed or operating as unincorporated businesses are eligible for Chapter 13 relief provided that the individual’s unsecured debts are less than $360,525 and secured debts are less than $1,081,500. These amounts are occasionally adjusted to reflect changes in the consumer price index. Individuals are prohibited from filing for Chapter 13 bankruptcy if during the preceding 180 days, a prior bankruptcy petition was dismissed due to the person’s willful failure to appear before the court or follow orders. Individuals also are not able to proceed through Chapter 13 proceedings if the person has within 180 days prior to filing receive any form of credit counseling from an EOUST approved credit counseling agency.
How Long Chapter 13 Bankruptcy Repayment Plans Last
The length of how long a person’s repayment plan lasts depends on how much a person earns in addition to how much the person owes. In situations where a person’s average monthly over the previous six months is greater than the median income for California, the individual will likely be required to file a five year plan. If a person’s income is lower than their median income, the person might be required to propose a three year plan.
Deciding Between a Chapter 13 and Chapter 7 Bankruptcy
A Chapter 13 bankruptcy is the only choice if a person is behind on their business payments or mortgage and wants to maintain ownership of their property. Chapter 13 bankruptcy also allows individuals to make up their overdue payments and reinstate their original mortgage agreements. In other cases, if a person has valuable property that is not covered by applicable bankruptcy exemptions, Chapter 13 bankruptcy is a better option.
Contact an Experienced Chapter 13 Bankruptcy Attorney
If you are interested in following through the Chapter 13 bankruptcy process, do not hesitate to contact an experienced bankruptcy attorney at the Bankruptcy Law Center today.