Information About a Chapter 13 Bankruptcy
What is a Chapter 13 Bankruptcy?
A Chapter 13 bankruptcy information - It is also known as the wage earners bankruptcy or reorganization, and is designed for individuals who earn too much to file under the Chapter 7 bankruptcy code. When you file for a Chapter 13 bankruptcy, you propose a payment plan to the Court indicating how you will repay your debt to creditors with your disposable income. Disposable income is any left over funds available after basic expenses have been paid. Your attorney will consolidate your income and expense information, and will and use those figures to determine what your monthly payment will be to the Court. If the payment plan is approved by the Court, it will last anywhere between three to five years, after which any remaining balances will be discharged. This means that as long as you have adhered to the payment plan, any monies still owed to creditors after the payment plan has been completed will be discharged. You will never have to pay it back, ever.
Chapter 13 Bankruptcy Eligibility
In order to qualify for a Chapter 13 bankruptcy, you have to be able to prove to the Court that you will have sufficient funds left over to contribute towards the Chapter 13 payment plan.
In order to file for a Chapter 13 bankruptcy, your secured debt total cannot exceed $1,149,525. Your unsecured debt cannot be more than $383,175. Your attorney will assist you in differentiating between secured debts and unsecured debts.
Another requirement to qualify for a Chapter 13 bankruptcy is that you must be current on your tax filing. Proof that you have filed federal and state tax income returns for four years preceding your bankruptcy filing can be submitted by either the actual tax returns or transcripts of the returns obtained from the IRS. Failure to provide proof of tax filings may result in your bankruptcy case being dismissed.
If you have received a discharge on a Chapter 13 bankruptcy in the past two years, or a Chapter 7 bankruptcy in the past four years, you may not be eligible for a Chapter 13 bankruptcy discharge. However, this does not mean that you are barred from filing a Chapter 13 bankruptcy in such cases. For example, you may file for a Chapter 13 bankruptcy as soon as you receive a Chapter 7 bankruptcy filing to handle any liens that were immune from a discharge on your Chapter 7 bankruptcy, but you will not be granted a discharge. In this case, a Chapter 13 bankruptcy filing will help you handle your other debt by way of the automatic stay. Your attorney can provide you on more information about filing a Chapter 13 bankruptcy immediately after receiving a Chapter 7 bankruptcy discharge.
These are just a few basic requirements of being eligible to file for a Chapter 13 bankruptcy. Your attorney can advise you further with regards to eligibility for a Chapter 13 bankruptcy.
How Can a Chapter 13 Bankruptcy Help Me?
One of the most attractive features of a Chapter 13 bankruptcy is that it will give you the opportunity to keep both exempt and non-exempt property. If you have fallen back on mortgage payments and are facing foreclosure, a Chapter 13 bankruptcy filing may help you save your home. Similarly, if your vehicle is being repossessed, a Chapter 13 bankruptcy will give you a chance to catch up on outstanding payments and prevent your vehicle from being repossessed.
Just like a Chapter 7 bankruptcy, once you file for a Chapter 13 bankruptcy, the Automatic Stay goes into effect. The Automatic Stay clause strictly prohibits creditors from pursuing any debt collection activities including action taken on any pending judgments. If a creditor does contact you seeking payment on outstanding payments after you have filed bankruptcy, he or she will be in violation of the Automatic Stay and can be sued.
A Chapter 13 bankruptcy acts like consolidation. Instead of keeping track of multiple payments to several creditors, you pay the Trustee one amount that will be distributed among all of your creditors. As mentioned previously, these payment plans last anywhere between three to five years, after which any remaining balances are discharged.
Some debt such as student loans and taxes that may not be discharged in a Chapter 7 bankruptcy can be included in a Chapter 13 bankruptcy, and be paid over time.
If you have a co-debtor on any of your debt, filing for a Chapter 13 will prohibit creditors from going after your co-debtor. However, in order for your co-debtor to be protected when you file for Chapter 13 bankruptcy, you have to be current on your Chapter 13 payment plan.