In Chapter 13 bankruptcy, you keep your property and repay your debts (some in full, others in part) through a plan that lasts from three to five years.
Who is eligible for Chapter 13 protection?
In order to file a successful Chapter 13 case, you must have enough income to fund a repayment plan. In addition, your secured debts cannot exceed $1,081,400 and your unsecured debts cannot exceed $360,475.
To learn more see, Debt Limits for Chapter 13 Bankruptcy.
How long will the Chapter 13 plan last?
How long your plan lasts depends on whether your monthly income is below or above your state's median income. If it is below the median income, in most cases, the plan will last three years. However, if necessary you can extend this period up to five years. If it is above the state median income, the plan must last five years.
To learn more about the Chapter 13 plan, see the articles in The Chapter 13 Repayment Plan.
Is any property subject to liquidation?
No, unlike a Chapter 7 bankruptcy, the trustee will not take any of your property or real estate.
For more on how your property is treated in Chapter 13 bankruptcy, see Your Property in Chapter 13 Bankruptcy.
Is Chapter 13 similar to loan consolidation?
Chapter 13 is similar to loan consolidation in that only one payment is made to the bankruptcy court trustee, who then pays creditors. (Some payments may be made outside of the plan, however, like ongoing mortgage payments.) However, unlike loan consolidation, creditors are legally bound to accept whatever plan the court approves.
To learn more about the Chapter 13 plan, see the articles in The Chapter 13 Repayment Plan.
What if something happens and I can’t afford the plan payment?
If your financial circumstances change, you may be able to modify your plan so that you pay less to the trustee each month. If your trouble is temporary, the trustee may allow you to make up missed payments over time. In certain circumstances, you may qualify for a hardship discharge, which means those debts that are eligible for discharge will be wiped out early. Learn more about the Chapter 13 hardship discharge.
You have other options too, like dismissing your case or converting to a Chapter 7 bankruptcy.
For more information about your options if you can't make plan payments, see the articles in The Chapter 13 Repayment Plan.
What will happen to my home and mortgage?
In Chapter 13 bankruptcy, you keep your property, and that includes your home. Of course, you'll have to keep making your ongoing mortgage payments. Chapter 13 also allows you to make up missed mortgage payments through your plan -- something that is not available in Chapter 7 bankruptcy.
In some circumstances, you can remove or "strip" second and third mortgages, as well as home equity lines of credit, effectively reducing your total home payments.
To learn more about what happens to your home and mortgage during Chapter 13 bankruptcy, see the articles in Your Home in Bankruptcy.
Learn more about Chapter 13 bankruptcy, the repayment plan, and how to file in our Chapter 13 Bankruptcy area.
