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 company, are qualified to file for Chapter 13 bankruptcy.
As part of a Chapter 13 reorganization, which is also called a wage earner's plan, debtors must submit and carry out a strategy to repay outstanding creditors within three to five years.
In the majority of situations the payment plan has to provide a considerable payback to creditors-- at least equal to what they would acquire under other types of bankruptcy-- and it has to, if needed, use 100% of the debtor's disposable income for repayment.
Understanding Chapter 13
With a Chapter 13 bankruptcy, debtors have to compile a list of all creditors along with the amount of money owed to each, a list of any property owned, information about income amounts and sources, and comprehensive information concerning monthly expenses.
A debtor then pays an agreed-upon monthly amount to an assigned, unbiased bankruptcy trustee, effectively consolidating debts into one monthly amount. The trustee subsequently allocates the money to the debtor's creditors. Debtors have no direct contact with creditors under Chapter 13 protection.
Consumers are qualified to use Chapter 13 only if their debts are below particular 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 Ch. 13 Bankruptcy in Fountain Valley, California, Contact Thomas K. McKnight LLP At (800) 466-7507 or Visit Our Website at TKMLLP.Com for a Free Consultation!