Chapter 13 Bankruptcy and the Chapter 13 Plan!
Chapter 13 offers individuals a number of advantages over liquidation under chapter 7. It enables individuals with regular income to develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years. The “means test” plays more of a roll in the Chapter 13 bankruptcy case wherein it determines how much a debtor might have to pay back.A Chapter 13 filing is recommended to stop a foreclosure on real property and to propose a chapter 13 plan to pay back the mortgage arrears. A chapter 13 bankruptcy can also allow you to reclaim a repossessed vehicle.
To be eligible for a Chapter 13 bankruptcy, your secured debt limit must not exceed. As of April 1, 2016, if your secured debts (mortgages and liens) add up to more that $1,184,200, or your unsecured debts add up to more than $394,725, Chapter 13 may not be available to you. In most cases, these individuals may be able to file a Chapter 11 bankruptcy instead.
How a Chapter 13 Plan Works
The main focus of this chapter of bankruptcy is the Chapter 13 Plan. When proposing the plan to the court, the debtor has to state what percentage of their overall debt they are repaying. Income, assets, means test, and your total debt play a major role in determining the percentage of debt that has to be paid back.
When you case is filed, a Chapter 13 Trustee is assigned to your case. Your creditors and the Chapter 13 trustee will have an opportunity to object to your plan and requests changes, amendments and/or additional documents. If you’re able to make changes to everyone’s satisfaction, the court will likely approve, or confirm your plan at your confirmation hearing. Your first plan payment is due the month following your filing.
Planning for the Chapter 13 Bankruptcy Plan is critical. When filing the case, debtor has to prove to the court that they can afford to meet both the monthly household obligations and pay the monthly repayment plan payment. More than ever, budgeting is key to a successful chapter 13 plan. Income and the value of debtor’s assets are play a big role in the chapter 13 case.
Our office will review your assets and debts to advise you on your options.
For more information about the Chapter 13 Bankruptcy, you can visit the US Courts website. Chapter 13 - Bankruptcy Basics
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