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Chapter 13 bankruptcy is a reorganization case filed by
individuals who have a valuable asset, such as a home, that is not
completely covered by exemptions and that they wish to keep. The
most common reason for debtors filing Chapter 13 is to stop
foreclosure proceedings and save their home. In
Chapter 13 a debtor proposes a plan to repay creditors over a three
to five year period during which the debtor can make up overdue
payments on any assets and pay into the plan the equivalent value of
any assets not covered by exemptions. Since the debtors plan will
require regular monthly or biweekly payments, Chapter 13 is usually
only appropriate for an individual debtor who has a regular source
of income.
At a confirmation hearing, the
court either approves or disapproves the plan, depending on whether
the plan meets the Bankruptcy Code’s requirements for confirmation.
Chapter 13 is very different from
chapter 7, since the chapter 13 debtor usually remains in
possession of the property of the estate and makes payments to
creditors, through the trustee, based on the debtor’s anticipated
income over the life of the plan. Unlike
chapter 7, the debtor does not receive an immediate discharge of
debts. The debtor must complete the payments required under the plan
before the discharge is received. The debtor is protected from
lawsuits, garnishments, and other creditor action while the plan is
in effect. The discharge is also considerably broader (i.e., more
debts are eliminated) under chapter 13 than the discharge under
chapter 7.
Find out if you qualify for Chapter 13 by filling out our
online
bankruptcy questionnaire right from your computer, or
e-mail one of our bankruptcy attorneys today.
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