Why File a Chapter 13 Bankruptcy?

What is the difference between a Chapter 13 and Chapter 7?

In a Chapter 13 you do not have to give up assets as you may have to in a Chapter 7 this includes personal, real property and secured property. Further, if you are several months behind on payments to a secured creditor and the creditor wants to repossess or foreclose (and you cannot make a deal), a Chapter 13 may force that creditor to allow you to make payments to catch up as well as make current payments without foreclosure or repossession.

Why file a Chapter 13 instead of a Chapter 7?

There are several reasons that a Chapter 13 may be better for you: (1) you may have property you want to keep that you may lose in a Chapter 7; (2) you may have some debts that can only be discharged in a Chapter 13; and (3) your income may be too high to qualify for a Chapter 7.

What impact does a Chapter 13 have on the possible foreclosure of my home?

The filing of a Chapter 13 will halt a FORECLOSURE or any other similar activities by creditors (GARNISHMENTS, ATTACHMENTS, JUDGMENTS AND REPOSSESSIONS). Further, your lender will be forced to allow you to create a payment plan to pay the past due monies. In addition, if you have a second mortgage on your home, you may be able to eliminate that mortgage completely in a Chapter 13 case.

What are the qualifications for Chapter 13?

First, you must be making regular income. At least, enough income that you can pay for necessities while all disposable income is used for required payments into a Chapter 13 Plan. Second, you cannot have over $336,900.00 in unsecured debts (e.g. credit cards) or over $1,010,650.00 in secured debts (e.g. home loans, car loans).

How long does a Chapter 13 take?

A plan can last 3 to 5 years, with 5 years being the norm.

What is a Chapter 13 plan?

When you file a Chapter 13 case, you also have to file what is called a Chapter 13 Plan. Through the Chapter 13 Schedules, you demonstrate all of your expenses and gross income, and establish what is called your disposable income, i.e. any income left over after expenses, taxes, etc. are paid for on a monthly basis. Under the Chapter 13 Plan, you must take all of your disposable income and pay that to creditors over the course of the Plan.