What Is Chapter 13?
Chapter 13 refers to an U.S. bankruptcy proceeding in which debtors undertake 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 eligible 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 plan to repay outstanding creditors within three to five years.
In the majority of circumstances the repayment plan must provide a considerable payback to creditors-- at least equal to what they would receive under other types of bankruptcy-- and it must, if required, use 100% of the debtor's disposable income for repayment.
Understanding Chapter 13
With a Chapter 13 bankruptcy, debtors have to assemble a list of all creditors and the amount of money owed to each, a list of any property owned, information about income amounts and sources, and detailed information regarding 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 subsequently distributes the money to the debtor's creditors. Debtors have no direct contact with creditors under Chapter 13 protection.
Individuals are eligible to make use of 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 must also have completed credit counseling to be considered eligible for Chapter 13.
For More Information About Ch. 13 Bankruptcy in Orange, California, Contact Thomas K. McKnight LLP At (800) 466 - 7507 or Visit Our Website at TKMLLP.Com for a Free Consultation!