chapter-13

CHAPTER 13

Chapter 13 is reorganization bankruptcy. In Chapter 13, there is a consolidated monthly payment plan (possibly as little as 1% of unsecured, non priority debts) for 3 to 5 years.

Those who are not eligible for Chapter 7 bankruptcy may still have Chapter 13 as an option.  There are some restrictions as to who can file Chapter 13, but it is an option for many people if you are not eligible for Chapter 7.

If you are above median income and don’t pass the means test, if you own a house with non-exempt equity, have made certain types of transfers, or have other prior, current, or future non-exempt assets that would be sold or seized in Chapter 7, or you had a Chapter 7 within the last 8 years, or for many other reasons and objectives, you can usually file Chapter 13 instead.

There are some debts that are included in a Chapter 13 that cannot be discharged in Chapter 7 bankruptcy, such as priority IRS and state income tax debt, unsecured 2nd mortgage liens, post petition HOA debt, MVA and Central Collection Unit debt, tickets and certain divorce related debts,  etc.

Chapter 13 permits the debtor time to include priority taxes; allows people to stop a foreclosure and catch up on mortgage and vehicle arrears; may eliminate unsecured second mortgages; crams down vehicle loans, keeps non-exempt assets, bifurcates liens, strips liens, among other benefits.

Chapter 13 Plans are not identical in terms of the benefits you can get. The results can be very different depending on which lawyer your choose to assist you. Technically, any attorney could handle your Chapter 13, but it is not a good idea just to get any lawyer to do so because you only have one shot to make sure you get what you are supposed to get out of your bankruptcy.

You need an attorney who can represent your interests in a legal proceeding through an adversarial process, in order to give you the best chance at claiming the full benefits of Chapter 13 bankruptcy.