Chapter 13

When you file a Chapter 13 Bankruptcy, you enter into a three to five year plan to make monthly payments to a Chapter 13 Trustee who disburses that money to your creditors.  Chapter 13 Bankruptcy gives you the ability to catch up on your past due mortgage payments, back taxes, car payments, and even child support.  The plan requires you to pay to the Trustee all of your excess income.  The concept of excess income in Bankruptcy law can be a confusing one, but, in general, it is intended to leave you with just enough money to pay for all of your necessary living expenses.  When you file a Chapter 13 Bankruptcy, you can expect to live a frugal lifestyle for a few years.  Luxuries are not permitted.  But with proper guidance from an experienced bankruptcy attorney, the plan will allow you to maintain a comfortable lifestyle.

So why file a Chapter 13 Bankruptcy rather than a Chapter 7? People file a Chapter 13 instead of Chapter 7 because they have too much income to qualify for Chapter 7, because they are trying to save a home that is in foreclosure, or because they want to keep some of their non-exempt assets that they would have to give up in a Chapter 7 Bankruptcy.

Most people who file for bankruptcy can’t afford to pay 100% of their creditors, even over five years.  But no matter how much or how little you pay, as long as you make all of the payments you agreed to make under the plan, the Court will forgive the remaining unpaid balances of any debts that would have been forgiven in a Chapter 7 Bankruptcy.

There is one other important distinction between Chapter 7 and Chapter 13 Bankruptcy.  There is no limit to the amount of debt you can have in a Chapter 7.  The only qualifying issue is your income.  However there are limits to the debt you can discharge in a Chapter 13 Bankruptcy.  Currently, to qualify for a Chapter 13 Bankruptcy, an individual’s unsecured debts must be no more than $383,175.00 and secured debts must be no more than $1,149,525.00.  These amounts are reviewed on a periodic basis and do change.  If you don’t qualify for a Chapter 7 because you have too much income and you don’t qualify for Chapter 13 because you have too much debt, then your only remaining option may be to file Chapter 11 Bankruptcy.

If you would like to speak with an attorney about Chapter 13 Bankruptcy, call Mark S. Steinberg, P.A. at (305) 671-0015 or fill out the Contact Form to schedule a FREE consultation.