CHAPTER 13

Chapter 13 is a payment plan ranging from 36 to 60 months.  In most cases, Clients do not repay all of their debts.  Generally, Clients pay only what they can reasonably afford to repay unsecured creditors in the case. 

 

For Chapter 13 filers, usually one or more of the following facts is true:
1. The household income is too high to qualify for Chapter 7;
2. Client is disqualified for a Chapter 7 based on a prior discharge;
3. Client wants to avoid property liquidation in a Chapter 7;
4. Client wants to save a home from foreclosure; and/or
5. Client wants to try to “strip off” the 2nd or 3rd mortgage on their home.


Chapter 13 Qualifications


There are generally only 4 requirements to qualify for a Chapter 13 bankruptcy discharge:
1. You are honest and forthright throughout the process;
2. You have not filed and received a discharge in a prior Chapter 7 case within 4 years
3. You have “regular” income, and that income is sufficient to support a “feasible” repayment plan; AND
4. You successfully complete the payment plan.


*Social Security, unemployment compensation, and other income besides employment income are usually considered “regular” income for Chapter 13 cases.


Payment Amount


Chapter 13 cases are very complicated. There are lots of rules that ultimately determine what your monthly payment might be in your bankruptcy case. The facts of every case, when applied to these rules, dictate a monthly payment amount. Factors include, but are not limited to: your household income, household size, property values, monthly expenses, special circumstances (e.g., caring for an elderly parent), bonuses, secured and priority debt amounts, arrearage amounts on mortgages, etc.