What Is It and Who Can File?
Chapter 13 Bankruptcy allows individuals to reorganize their debts through a repayment plan that lasts between 3 to 5 years. You make monthly payments to a Chapter 13 Trustee to pay toward your debts. To qualify, individuals must have regular income greater than allowed, reasonable living expenses. In addition, a person cannot have unsecured debts of more than $383,175 or secured debts more than $1,149,525 to qualify for a Chapter 13. At the end of the successful completion of the bankruptcy plan, any remaining portion of the unsecured debt is discharged.
How Much Do You Have to Pay?
You are able to keep all of your assets in a Chapter 13. The amount you repay to your creditors (anywhere between 1% to 100% plus interest) depends on several factors: the value of your assets; whether the assets are exempt; the amount of your income; and the type of debt. Some types of debts, known as priority claims, must be paid in full. Taxes and past due child support are examples of priority debts. Also, the amount you are past due on your mortgage must be paid in full through the plan if you want to keep your real estate.
Why file a Chapter 13?
A Chapter 13 Bankruptcy allows you to repay debts that are not discharged in a Chapter 7. We often consider a repayment plan when:
- You owe taxes or past due child support
- You are behind on your house or automobile loans
- You owe a former spouse under a property settlement agreement
- Your assets are worth more than the exemptions
- Your income exceeds the Means Test
- Your high interest automobile loan is at least 2 ½ years old and you owe more than the vehicle is worth
- You have liens that are greater that the value of the assets securing the debt.
A Chapter 13 Bankruptcy filing provides tremendous protection and flexibility in dealing with your debt. You can keep all your property, strip off second mortgages, value some secured debt and reduce your interest rate on many secured debts. To learn more about Chapter 13, and how you can use it to protect your future, contact our Chapter 13 attorneys at 843-849-1900.