Chapter 13

In a Chapter 13 bankruptcy case, an individual with regular income repays all, or a portion of his or her debts over a three-to-five-year period through a monthly payment plan approved by the Bankruptcy Court. For that reason, a Chapter 13 bankruptcy case is sometimes referred to as a “wage-earner plan.” Also, many sole proprietors file Chapter 13 bankruptcy plans to restructure how their debts are repaid. The Chapter 13 Bankruptcy Trustee does not take possession of non-exempt assets, but supervises the case and administers the payments to creditors under the Chapter 13 bankruptcy plan. In exchange for these payments, you can keep property you have, which a trustee would sell from under you in chapter 7 bankruptcy. So in chapter 13 bankruptcies, you can:

  • Save your house
  • Keep your car
  • Keep your property
  • Save your business

The amount of your plan payment and the length of your plan depends on a number of factors. One factor is how much disposable income you have left over every month after you pay your living expenses. A second factor is how much you are behind on your secured debts (e.g., mortgage, car payment, etc.)

The most common reasons for consumer bankruptcy claims are (a) loss of a job or long-term layoffs; (b) loss of overtime hours; (c) lengthy illnesses and large medical expenses; (d) death or disability of a spouse; (e) separation, divorce and marital problems; (f) seriously over-extended credit; and (g) large unexpected expenses.

Does a Chapter 13 bankruptcy sound like something you’re interested in? Call us today to learn more.