Thomas K. McKnight - Bankruptcy Law Firm in Tustin, California
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 operating an unincorporated company, are eligible to apply for Chapter 13 bankruptcy.
As part of a Chapter 13 reorganization, which is also known as a wage earner's plan, debtors have to submit and carry out a strategy to repay outstanding creditors within three to five years.
In most circumstances the repayment strategy has to offer a substantial payback to creditors-- at least equal to what they would receive under other forms 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 must assemble a list of all creditors along with the amount of money owed to each, a list of any property owned, information concerning income amounts and sources, as well as detailed information about monthly expenses.
A debtor then pays an agreed-upon monthly amount to a designated, unbiased 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.
People are eligible to utilize 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 periods).
Filers must also have completed credit counseling to be considered eligible for Chapter 13.
For more information about chapter 7 and chapter 13 bankruptcy, or how to file your bankruptcy in Tustin CA, contact Thomas K McKnight LLP at (800) 466 - 7507 or visit our website at TKMLLP.com for a Free Consultation.