What Is A Chapter 13 Bankruptcy?

Information About Chapter 13 Bankruptcy

This chapter bankruptcy is the second most common form of bankruptcy in the United States. Chapter 13 refers to the 13th chapter of the federal bankruptcy code where all of the laws and rules about chapter 13 bankruptcies are written. In a chapter 13 discharge the debtor and the bankruptcy court together with the creditors will establish a debt repayment plan. In a chapter 13 bankruptcy the court will set up a reorganization plan where the filer only has to pay back a small percentage of the total amount owed. With a chapter 13 discharge the filing party is not required to liquidate any of their assets. In most cases the creditors will be happy to get some of the debt back instead of none. Most reorganization plans are setup to allow the bankruptcy filer to pay back the debts in 3-5 years.

A chapter 13 bankruptcy is not quite as quick and easy at the chapter 7 but it usually allows the filing party to receive a more favorable credit status after the bankruptcy repayment plan is completed. In order to be eligible to file for a chapter 13 you must be able to prove to the court that you have enough income to meet your repayment obligations. For those with little or no income a chapter 7 bankruptcy is usually a better option. In order to quality for a chapter 13 bankruptcy you also cannot have over $1,010,650 in secured debt and $336,900 in unsecured debt. If you have over these amounts you are automatically ineligible to file a chapter 13 per the United States bankruptcy code. Chapter 13 bankruptcies cost $274 for the filing fee and attorney fees can range from $1500-$4000 depending on the complexity of your situation.

In order to file a chapter 13 bankruptcy you will first need to setup a meeting with a lawyer. We do not recommend that you try to file on your own. The complexity of a chapter 13 is far to great for someone without prior knowledge to try to do it on their own. The best way to find a bankruptcy lawyer is to check online.

The first step in filing is to receive credit cousenling from a company approved by the United States Trustee's Office. These companies will charge a fee seperate from the bankruptcy fees however these fees can be waived for people who cannot afford them.

After going through credit counseling you will need to file your petition for bankruptcy. With your petition you must include forms that describe all of your assets and liabilities, your current income, your current living expenses, any contracts that require you to pay 3rd parties, and a statement of financial affairs. Other things you might also be required to do include preparing a budget, dealing with secured debtors, and attending meetings with creditors.

After filing for your chapter 13 bankruptcy a trustee will be assigned to your case to help everything move forward correctly. In most chapter 13 cases the amount that the filer is required to repay varies greatly based off of their income. Each situation is very unique and specific number cannot be given. Employing a bankruptcy attorney is always a good idea because they might be able to get you the most favorable outcome here.

If you cannot make the payments on your repayment then then there are often several options that you have. Sometimes the court will completely discharge your bankruptcy if you experience some sort of hardship (like a loss of your job). If the court refuses to do this you can look into converting your chapter 13 bankruptcy into a chapter 7 bankruptcy.

In nearly all cases a chapter 13 bankruptcy will be completely wrapped up within 5 years so long as you make all of your payments and make them on time. A chapter 13 bankruptcy is a great opportunity for individuals that have accumulated to much debt to handle at once but still have enough income to pay them off over time. When deciding whether to file a chapter 13 bankruptcy the most important thing to do is find out whether it is really necessary. If it is at all possible to pay off your debts without a bankruptcy you will be significantly better off in the end. The best thing you can do to determine the right choice for you is to contact a local bankruptcy attorney for a free consultation.