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Chapter 13 Bankruptcy

Helping Americans File Bankruptcy Under Chapter 13

According to U.S. Bankruptcy Court statistics, 333,626 individuals or couples filed for Chapter 13 bankruptcy in 2013. Chapter 13 is referred to as “reorganization,” as it helps consolidate all of your required debt obligations into one monthly payment that is manageable based on your income. If you are considering Chapter 13 bankruptcy, you should consult with an experienced bankruptcy lawyer as soon as possible. 

Why choose Chapter 13?

Though the majority of individuals in the United States file for bankruptcy under Chapter 7, there are several reasons why you may elect to file under Chapter 13 instead. Such reasons include the following:

  • You did not qualify for Chapter 7. In order to file under Chapter 7, individuals or married couples must first pass a “means test” based on their monthly or disposable income. If you have too much income, you may have to file under Chapter 13 instead.
  • You filed for bankruptcy in recent years. You will be ineligible to file for Chapter 7 bankruptcy if you previously had a Chapter 7 discharge approved within the past eight years or Chapter 13 reorganization within the last six years. However, in order to qualify for Chapter 13, you must only wait four years after a prior Chapter 7 discharge and only two years after a prior reorganization. Therefore, Chapter 13 may be a good option for people who have more recent past filings.
  • You want to keep your property. If you have substantial property that is not exempt under Chapter 7, you may want to file under Chapter 13 so you do not have to surrender that property for liquidation.
  • You have certain types of nondischargeable debt. Some debts cannot be discharged or handled under Chapter 7 bankruptcy. Chapter 13 reorganization can better assist you if you are behind on a mortgage, motor vehicle loans, student loans, tax obligations, and more. 

The Chapter 13 Process

Chapter 13 bankruptcy involves the reorganization of your debts so that they are manageable. First, you must qualify for Chapter 13 based on your monthly income and debt burden. If your income is too low or debts are too high, you may have to choose another type of bankruptcy.

You must then design a repayment plan that requires monthly payments that go to your creditors based on debt priority. The repayment plan will last for three to five years, depending on your income. Once your payment plan is complete, the court will wipe out any remaining debts that qualify for discharge if you meet the requirements. 

Why You Need the Help of an Experienced Bankruptcy Attorney

The bankruptcy process may be complicated and confusing for those who are not familiar with the federal court system. Bankruptcy laws and procedures must be closely followed in order for your bankruptcy to be approved and have the best result possible. For this reason, you should always seek the help of an attorney who is highly familiar with both federal and state bankruptcy laws and knows how to follow the law and best apply them to your case. If you are considering filing Chapter 13 or another type of bankruptcy, contact an experienced bankruptcy lawyer today for help.