Chapter 13 Bankruptcy
Repay your debts over time.
What is Chapter 13 Bankruptcy?
Are you behind on your payments, but just need some time to catch up? Are you overburdened with debt but you make too much to file a Chapter 7 bankruptcy? Then a Chapter 13 bankruptcy may offer a path to debt relief. A Chapter 13 bankruptcy plan is a way to catch up on past-due payments and reduce the amount of your unsecured debt.
Chapter 13 Eligibility:
In order to file for Chapter 13 bankruptcy, you must have regular income. “Regular income” could mean income from your job or retirement, but it also could be income that another family member contributes. The only requirement is that it is regular. If you are trying to save your house from foreclosure or your car from repossession, you will need to have enough income to pay your regular payment, plus enough to repay the past-due amounts over a 5 year period. Your debts also must be under certain limits. Your secured debts must be below $1,184,200. Your unsecured debts must be below $394,725. The limits apply whether you file your case individually, or jointly with a spouse. If you are married, considering filing a joint Chapter 13 bankruptcy, but if your debts exceed these amounts, you may consider filing separate cases. If your debts exceed these limits, you may still file Chapter 7 or even Chapter 11 bankruptcy.
The Discharge:
Once your plan is paid in full, you will be caught up on your past-due amounts on home mortgages and your car loan will be paid off. Those creditors will then be prohibited from continuing foreclosure or repossession. Also, most of your unsecured debt will be discharged – meaning you are no longer legally obligated to pay those creditors. It also means those unsecured creditors can no longer enforce the debt. If those creditors take any action against you, they will be violating bankruptcy discharge injunction and may end up owing you money for damages.
