Chapter 13 Bankruptcy
by SKU
Published: Dec 11, 2017 | Updated: Mar 12, 2018 |
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Chapter 13 Bankruptcy
What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is a wage earner's plan. Chapter 13 allows individuals with regular income to propose a plan to repay all or part of their debts. The plan sets forth an agreement to make installment payments to creditors over a three to five year period. After the plan is confirmed by the Court, the law forbids creditors from starting or continuing collection efforts. After the plan is paid in full the debtor(s) will be granted a "discharge" from all dischargeble debts.
Why do debtors choose Chapter 13 over Chapter 7
Primarily, individuals choose Chapter 13 to save their homes from foreclosure by curing delinquent mortgage payments over time in the plan (however, regular mortgage payments must still be made on time outside the plan).
Secondly, individuals can reschedule other secured debts reducing the payment by extending the payment over the life of the chapter 13 plan.
Thirdly, Chapter 13 sometimes protects third party co-signers who are also liable with the debtor on consumer debts.
Lastly, Chapter 13 consolidates unsecured debt because individuals pay the trustee directly a percentage of the overall unsecured debt (as low as 5%) and will not be dealing with the creditors.
Chapter 13 Eligibility?
1) Any individual is eligible for chapter 13 relief as long as the individual's secured debts are less than $1,184,200, and unsecured debts are less than $394,725.
2) Individuals filing Chapter 13 bankruptcy will have to take an approved Credit Counseling Course before the petition can be filed (may be delayed on a foreclosure emergency).
3) Individuals filing Chapter 13 bankruptcy will have to complete an approved Financial Management Course before discharge can occur.
4) Individuals filing Chapter 13 bankruptcy will have to provide additional documentation to prove their financial condition.
How much does it cost to file a chapter 13?
Costs: Filing Fee: $310.00
Attorney Fee: Range $1500.00 - $2500.00 (depends on the circumstances).
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