Chapter 13 bankruptcy is a reorganization plan for individuals, requiring you to have secured and unsecured debts under a certain amount. Chapter 13 is usually preferred if you have a valuable asset, such as a home, that is not completely covered by exemptions and that you want to keep. Under Chapter 13, you keep all of you property, but must make regular payments to a trustee who then distributes the payments to the creditors. Chapter 13 is usually only advisable for an individual who has a regular source of income, because the plan will require regular monthly or biweekly payments.
Most plans last for three to five years, and then eligible debts are discharged. Creditors may challenge a Chapter 13 plan, but a plan can still be confirmed over their objection if the criteria for confirmation is otherwise met. One of the requirements for confirmation of a Chapter 13 plan is that unsecured creditors would receive at least as much as they would receive in a Chapter 7 liquidation.
A local bankruptcy attorney can help you understand the differences between Chapter 7 bankruptcy and Chapter 13 bankruptcy, so that you can make an educated decision about the best next step for you. Fill out the form below for a free bankruptcy case evaluation by a local attorney.
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[...] Chapter 13 is different. Under Chapter 13, you are allowed to keep all of your assets — even if you own two $10 million homes and a pair of Honus Wagner baseball cards, you can keep your stuff. The bad news is that your debts are not discharged. Instead, you are put on a three- or five-year program, under which you will be required to make payments to a court-appointed bankruptcy trustee equal to all of your income in excess of your “basic living expenses.” Who decides your “basic living expenses” are? The IRS; not you. [...]
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