1. What is Chapter 13?
A Chapter 13 filing reorganizes your debt. Under Chapter 13, a person is allowed to restructure their debt while paying some of it back under court supervision. Chapter 13 does not provide the immediate and complete relief available under Chapter 7, but not everyone can qualify for a Chapter 7 filing. As the Chapter 13 plan proceeds, the individual cannot get additional credit without getting court supervision first.
2. How is a Chapter 13 different than a Chapter 7?
Think of a Chapter 7 filing as an immediate "knock out" punch. With a Chapter 7 discharge you immediately and completely knock down most of your debts. These debts get knocked down cold on the mat and you walk away from them forever.
A Chapter 13 Bankruptcy is more like a win by technical knockout. You submit a plan to the court (an attorney usually drafts these) and after several rounds of chipping away at the debt (in this case it is several years) you are eventually declared the winner after paying back some, but not usually all, of the debt.
3. How much does a Chapter 13 cost?
This question is similar to asking "How much does a car cost?" Some cars are much more expensive than others because they have more features. A Chapter 13 is very similar to a car in this respect. The range of cost for a Chapter 13 plan will vary depending upon a variety of factors, including but not limited to: type of debt, number of creditors, amount of property, amount of debt, etc.
The safest way to determine the fairness of a Chapter 13 case pricing is to check with different attorneys. Most will provide you with a free consultation, and they will likely take your Chapter 13 case for a flat fee.
4. Why would someone file a Chapter 13 Bankruptcy?
Most of the time, a consumer will file a Chapter 13 Bankruptcy because they have lost a job, or they have had a prolonged illness or perhaps even a spouse has died or is disabled. Sometimes people file a Chapter 13 because they are getting a divorce or are separating.
5. Can a business file a Chapter 13 Bankruptcy?
Only individuals (non-business filers) can file a Chapter 13 Bankruptcy. You must have a domicile, reside or have a place of business or property in the United States or a municipality. You cannot have a bankruptcy filing dismissed for cause within the last 180 days.
Additionally, you must have regular income. If you do not, then you should see if you qualify under a Chapter 7 Bankruptcy.
For cases filed between April 1, 2007 and March 31, 2010, your debts cannot exceed $1,010,650 in secured debt or $336,900 in unsecured debt. If your case was not filed during this period, you should consult with an attorney to determine what are the applicable amounts.
You must have completed an approved credit counseling briefing course within the 180 days prior to filing the petition.
6. If I have filed for Bankruptcy before, can I file for a Chapter 13 Bankruptcy now?
Yes. You can file a new Chapter 13 case even if you have filed bankruptcy before. But, you may not be eligible to file a new case if your previous case was dismissed in the last 180 days for willful disobedience of a court order, or you voluntarily dismissed your case following a creditor's request for relief from the automatic stay.
Pursuant to changes in the Bankruptcy Code that took effect on October 17, 2005 (it's typically abbreviated "BAPCPA"), there are additional restrictions on whether you are entitled to a discharge in the new case. Consult with an attorney if you have further questions.
7. Can I keep my home?
Yes. In fact, one of the main reasons someone files a Chapter 13 bankruptcy would be to keep their home. If you are delinquent in your payments, your Chapter 13 plan will usually provide that you begin making your current payments and not get any further behind. Any past due payments will be included in your payment plan and paid to the mortgage company through the trustee.
In some cases, the trustee will make your current mortgage payments as part of your Chapter 13 plan if you have been delinquent with mortgage payments prior to filing bankruptcy.
8. How long does a Chapter 13 take?
Under the Bankruptcy Code, Congress created an equation called the "means test". The means test is complicated, but generally speaking, a complete review of your finances for the six (6) months prior to filing your bankruptcy determines whether your plan needs to be 36 months or 60 months long.
If your average income from the preceding six (6) months is greater than the average household income for a similar size household in your area, then you are referred to as an "over median" debtor. If you are an "over median" debtor, then your plan will probably last 60 months. This is not required in all jurisdictions, and you need to consult with an attorney as to the case law in your area.
If your average income from the preceding six (6) months is less than the average household income for a similar size household in your area, you are an "under median" debtor. If you are under median debtor, then you are not required to propose a plan any longer than 36 months, but you may propose a longer plan if necessary,
The length of your plan is a decision made with your attorney.
A Chapter 13 filing reorganizes your debt. Under Chapter 13, a person is allowed to restructure their debt while paying some of it back under court supervision. Chapter 13 does not provide the immediate and complete relief available under Chapter 7, but not everyone can qualify for a Chapter 7 filing. As the Chapter 13 plan proceeds, the individual cannot get additional credit without getting court supervision first.
2. How is a Chapter 13 different than a Chapter 7?
Think of a Chapter 7 filing as an immediate "knock out" punch. With a Chapter 7 discharge you immediately and completely knock down most of your debts. These debts get knocked down cold on the mat and you walk away from them forever.
A Chapter 13 Bankruptcy is more like a win by technical knockout. You submit a plan to the court (an attorney usually drafts these) and after several rounds of chipping away at the debt (in this case it is several years) you are eventually declared the winner after paying back some, but not usually all, of the debt.
3. How much does a Chapter 13 cost?
This question is similar to asking "How much does a car cost?" Some cars are much more expensive than others because they have more features. A Chapter 13 is very similar to a car in this respect. The range of cost for a Chapter 13 plan will vary depending upon a variety of factors, including but not limited to: type of debt, number of creditors, amount of property, amount of debt, etc.
The safest way to determine the fairness of a Chapter 13 case pricing is to check with different attorneys. Most will provide you with a free consultation, and they will likely take your Chapter 13 case for a flat fee.
4. Why would someone file a Chapter 13 Bankruptcy?
Most of the time, a consumer will file a Chapter 13 Bankruptcy because they have lost a job, or they have had a prolonged illness or perhaps even a spouse has died or is disabled. Sometimes people file a Chapter 13 because they are getting a divorce or are separating.
5. Can a business file a Chapter 13 Bankruptcy?
Only individuals (non-business filers) can file a Chapter 13 Bankruptcy. You must have a domicile, reside or have a place of business or property in the United States or a municipality. You cannot have a bankruptcy filing dismissed for cause within the last 180 days.
Additionally, you must have regular income. If you do not, then you should see if you qualify under a Chapter 7 Bankruptcy.
For cases filed between April 1, 2007 and March 31, 2010, your debts cannot exceed $1,010,650 in secured debt or $336,900 in unsecured debt. If your case was not filed during this period, you should consult with an attorney to determine what are the applicable amounts.
You must have completed an approved credit counseling briefing course within the 180 days prior to filing the petition.
6. If I have filed for Bankruptcy before, can I file for a Chapter 13 Bankruptcy now?
Yes. You can file a new Chapter 13 case even if you have filed bankruptcy before. But, you may not be eligible to file a new case if your previous case was dismissed in the last 180 days for willful disobedience of a court order, or you voluntarily dismissed your case following a creditor's request for relief from the automatic stay.
Pursuant to changes in the Bankruptcy Code that took effect on October 17, 2005 (it's typically abbreviated "BAPCPA"), there are additional restrictions on whether you are entitled to a discharge in the new case. Consult with an attorney if you have further questions.
7. Can I keep my home?
Yes. In fact, one of the main reasons someone files a Chapter 13 bankruptcy would be to keep their home. If you are delinquent in your payments, your Chapter 13 plan will usually provide that you begin making your current payments and not get any further behind. Any past due payments will be included in your payment plan and paid to the mortgage company through the trustee.
In some cases, the trustee will make your current mortgage payments as part of your Chapter 13 plan if you have been delinquent with mortgage payments prior to filing bankruptcy.
8. How long does a Chapter 13 take?
Under the Bankruptcy Code, Congress created an equation called the "means test". The means test is complicated, but generally speaking, a complete review of your finances for the six (6) months prior to filing your bankruptcy determines whether your plan needs to be 36 months or 60 months long.
If your average income from the preceding six (6) months is greater than the average household income for a similar size household in your area, then you are referred to as an "over median" debtor. If you are an "over median" debtor, then your plan will probably last 60 months. This is not required in all jurisdictions, and you need to consult with an attorney as to the case law in your area.
If your average income from the preceding six (6) months is less than the average household income for a similar size household in your area, you are an "under median" debtor. If you are under median debtor, then you are not required to propose a plan any longer than 36 months, but you may propose a longer plan if necessary,
The length of your plan is a decision made with your attorney.