What is the difference between a Chapter 13 and Chapter 7?

In a Chapter 13 you do not have to give up assets as you may have to in a Chapter 7 this includes personal, real property and secured property. Further, if you are several months behind on payments to a secured creditor and the creditor wants to repossess or foreclose (and you cannot make a deal), a Chapter 13 may force that creditor to allow you to make payments to catch up as well as make current payments without foreclosure or repossession.

Why would I/we file a Chapter 13 instead of a Chapter 7?

As stated above, you may have property you want to keep– that you may lose in a Chapter 7. Further, there are some debts that are non-dischargeable in a Chapter 7 that you may discharge in a Chapter 13. Finally, if you make too much income and do not qualify under the Means Test then a Chapter 13 may work for you.

I have a home and I am behind in payments, foreclosure has been threatened and my lender is refusing to deal with me, what can Chapter 13 do for me?

The filing of a Chapter 13 will halt a foreclosure or any other similar activities by creditors (garnishments, attachments, judgments and repossessions). Further, secured creditors who have refused to deal with you before the bankruptcy will be forced to allow you to create a payment plan to pay the past due monies. Further, secured debts (other than for a primary residence) the payments on the debt can be spread out for the length of the plan.

What are the qualifications for Chapter 13?

First, you must be making regular income. At least, enough income that you can pay for necessities while all disposable income is used for required payments into a Chapter 13 Plan. Second, you cannot have over $336,900.00 in unsecured debts or over $1,010,650.00 in secured debts.

How long does a Chapter 13 take?

A plan can last 3 to 5 years, with 5 years being the norm.

What is a Chapter 13 plan?

A Chapter 13 plan basically demonstrates how you will pay off your various debts with your regular income. The plan takes into account all of your necessities and disposable income and it will show the Court how you intend to use the disposable income to pay creditors within 3 to 5 years. The plan must (1) be filed in good faith; (2) demonstrate that unsecured creditors will be receiving as much as they would had you filed a Chapter 7; and (3) allocate ALL of your disposable income. The Chapter 13 plan may be modified at any time before Confirmation, but any modification must meet the strict content requirements of the plan.

What are the procedures for Chapter 13

See our Bankruptcy Procedures & Timelines page. Basically, the filing is very similar to that of a Chapter 7. However, you are indicating to the Court that you intend to file a Chapter 13 and you are filing a Chapter 13 Plan which indicates your intent with regard to secured property, money allocation, etc. Shortly after filing you will have to attend a §341 Meeting of Creditors.

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