What Is Chapter 13?
What Is Chapter 13?
Chapter 13 refers to an U.S. bankruptcy proceeding in which debtors undergo a reorganization of their finances under the supervision and approval of the courts. Individuals and married couples, even if self-employed or running an unincorporated business, are eligible to apply for Chapter 13 bankruptcy.
As part of a Chapter 13 reorganization, which is also called a wage earner's plan, debtors must submit and follow through with a plan to repay outstanding creditors within three to five years.
In the majority of situations the repayment strategy has to provide a considerable payback to creditors-- at least equal to what they would get under other forms of bankruptcy-- and it must, if required, use 100% of the debtor's disposable income for payment.
Understanding Chapter 13
With a Chapter 13 bankruptcy, debtors must assemble a list of all creditors and the amount of money owed to each, a list of any property owned, information concerning income amounts and sources, as well as comprehensive information about monthly expenses.
A debtor then pays an agreed-upon monthly amount to an assigned, impartial bankruptcy trustee, effectively consolidating debts into one monthly amount. The trustee in turn disperses the money to the debtor's creditors. Debtors have no direct contact with creditors under Chapter 13 protection.
Consumers are eligible to make use of Chapter 13 only if their debts are below specific limits: $419,275 for unsecured debt and $1,257,850 for secured debt as of February 2019 (increases come in three-year intervals).
Filers have to also have completed credit counseling to be considered eligible for Chapter 13.
For more information about Chapter 13 Bankruptcy in Westminster, California, contact Thomas K. McKnight LLP at (800) 466-7507 or visit our website at TKMLLP.Com for a free consultation!
