Commonly known as the “wage earner’s plan,” Chapter 13 offers debtors several advantages over other bankruptcy chapters ― primarily by allowing them to retain possession of high-value assets. This type of bankruptcy filing provides debtors earning a steady income with the opportunity to develop a total or partial debt repayment plan via installments spread out over a three- to five-year period.
Benefits of Chapter 13 bankruptcy
Chapter 13’s numerous benefits include:
- Halts foreclosure proceedings ― Permits debtors to cure, or fix, late mortgage payments in order to keep their homes
- Possibility of restructuring secured debts ― Establishment of a spread-out repayment schedule helps lower monthly bills and speed debtors’ recovery
- Protection of third parties ― Third parties who are jointly liable with the debtor on certain consumer debts are immunized from the bankruptcy, protecting co-signers and others
- · Assistance of bankruptcy trustee ― The trustee is responsible for transferring payments from the debtor to various creditors, insulating the debtor from direct interaction with them
Chapter 13 filing eligibility
Any individual is eligible to file for bankruptcy under Chapter 13, provided he or she has unsecured debts of less than $360,475 and secured debts amounting to less than $1,081,400. Individuals who are self-employed or own an unincorporated business are also eligible for relief under this chapter, provided their debts do not exceed the permitted amounts. Corporations and partnerships are not eligible for this type of filing, but instead may qualify for debt relief through Chapter 11 bankruptcy.
If you are contemplating different bankruptcy filing options, contact the attorneys at BK Lawyers LLC for your free initial consultation to determine if Chapter 13 is right for you.