Bankruptcy Basics - Chapter 13 Background

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P. O. Box 173 | Montgomery AL | 36101-0173

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Chapter 13 Background

 

This chapter of the Bankruptcy Code provides for adjustment of debts of an individual with regular income. Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years.

 

Background

A chapter 13 bankruptcy enables individuals with regular income to develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years. If the debtor's current monthly income is less than the applicable state median, the plan will be for three years unless the court approves a longer period "for cause." If the debtor's current monthly income is greater than the applicable state median, the plan must be for five years. In no case may a plan provide for payments over a period longer than five years. 11 U.S.C.  1322(d). During this time the law forbids creditors from starting or continuing collection efforts.

 

Article information taken from www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-13-bankruptcy-basics

Chapter 13 Bankruptcy Basics

 

Chapter 13 Background

Advantages of Chapter 13

Chapter 13 offers individuals a number of advantages over liquidation under chapter 7. Perhaps most significantly, chapter 13 offers individuals an opportunity to save their homes from foreclosure. Read This

 

Chapter 13 Eligibility

Any individual, even if self-employed or operating an unincorporated business, is eligible for chapter 13 relief as long as the individual's unsecured debts are less than $383,175 and secured debts are less than $1,149,525. Read This

 

 

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Sabrina L. McKinney

Chapter 13 Trustee, Middle District of Alabama