Chapter 13 bankruptcy information
Chapter 13 bankruptcy provides a viable option for those unable to qualify for Chapter 7, or for those who wish to keep their assets while still being able to get a better handle on debt. Of the various types of bankruptcy, Chapter 13 is known as the “wage earners” chapter and is classified as a reorganization plan under the Bankruptcy Code.
There are several important provisions to be aware of for Chapter 13 bankruptcy, but the main point is that this form of bankruptcy does not simply liquidate debt like Chapter 7. Instead, at least some of the total debt owed will be repaid during a 3 to 5 year time period, in exchange for keeping your property and other assets. With Chapter 13, debts are paid directly from regular income, wages or otherwise, through structured repayment methods. During the repayment time period, creditors cannot further their collection efforts against a debtor.
Chapter 13 bankruptcies have become a common form of consumer bankruptcy since changes were made to the Bankruptcy Code in 2005 making it impossible for many individuals to file Chapter 7 due to more stringent eligibility requirements. While Chapter 7 has an income cap, requiring you to pass what is known as a means test or make less than the median income in your state, Chapter 13 does not have this limitation. Further, Chapter 13 does not require debtors to turn over all non-exempt assets for sale as Chapter 7 does.
There are several important provisions to be aware of for Chapter 13 bankruptcy, but the main point is that this form of bankruptcy does not simply liquidate debt like Chapter 7. Instead, at least some of the total debt owed will be repaid during a 3 to 5 year time period, in exchange for keeping your property and other assets. With Chapter 13, debts are paid directly from regular income, wages or otherwise, through structured repayment methods. During the repayment time period, creditors cannot further their collection efforts against a debtor.
Chapter 13 bankruptcies have become a common form of consumer bankruptcy since changes were made to the Bankruptcy Code in 2005 making it impossible for many individuals to file Chapter 7 due to more stringent eligibility requirements. While Chapter 7 has an income cap, requiring you to pass what is known as a means test or make less than the median income in your state, Chapter 13 does not have this limitation. Further, Chapter 13 does not require debtors to turn over all non-exempt assets for sale as Chapter 7 does.