Chapter 13 bankruptcy plan approved by the Bankruptcy Court allows some of the debts to be repaid according to the plan with the remaining debt fully discharge after successful completion of partial debt repayment under the plan. Chapter 13 bankruptcy may be available to individuals who not qualify for Chapter 7 bankruptcy because their income is too high or their assets have too much value, or to individuals who prefer Chapter 13 bankruptcy because it offers a more desirable solution to deal with their specific financial situation. For example, Chapter 13 bankruptcy plan may stop pending foreclosure and allow for repayment of mortgage arrears for individuals who have fallen behind their mortgage payments but who want to retain their home or real estate investment by making regular monthly payments under Chapter 13 bankruptcy plan and by resuming to make their regular monthly mortgage payments.
Just like with Chapter 7 bankruptcy, filing a bankruptcy petition under Chapter 13 immediately places you under protection of the Bankruptcy Court putting stop to all creditor actions (known as automatic stay). Most Chapter 13 bankruptcy plans require regular monthly payments to the bankruptcy trustee over a period of 36 to 60 months (3 to 5 years) and the trustee, in turn, makes payments to the creditors according to the Bankruptcy Court approved plan. Once the repayment plan is successfully completed, the Bankruptcy Court issues a discharge order, which effectively eliminates all remaining debts.
Many Chapter 13 bankruptcy plans fail because of poor planning. Please contact our office at (847) 297-9977 or email us at [email protected] for a strictly confidential consultation regarding a potential Chapter 13 bankruptcy.
Chapter 13 Qualifications
Although it is often used by individuals who do not qualify to file Chapter 7 bankruptcy petition because their income is too high or they have too much value in assets, Chapter 13 bankruptcy has its own qualification requirements.
In order to qualify for Chapter 13 bankruptcy, you must have income that will allow you to make monthly payments pursuant to the court approved payment plan above your regular monthly living expenses. A careful analysis of your income based on your pay-stubs for W-2 employees and your income (profit and loss) statement for the last 6 months for self-employed individuals and income tax returns from the last 4 years and your expenses will determine whether you qualify for Chapter 13 bankruptcy and, if so, what your monthly Chapter 13 plan payment will be.
In order to qualify for Chapter 13 bankruptcy, your unsecured debts may not exceed $336,900 and your secured debts may not exceed $1,010,650.