All About Chapter 13 Bankruptcy

  • chapter 13

All About Chapter 13 Bankruptcy

Call: 888-297-6203

Chapter 13 is the second most popular form of bankruptcy after Chapter 7. If bankruptcy can help you protect your assets, it is due to Chapter 13. Chapter 13 helps in safeguarding the assets of the debtor. This can be a chapter to opt for if a debtor is very particular and wants to safeguard all or most of his assets. To know more about when to choose which chapter and how to go ahead with it, log on to

Eligibility for Chapter 13

Just having the intent to save assets is not enough to qualify for chapter 13. There are some other checkboxes to tick. These can be listed as follows-

  • Have a consistent income

To be eligible for chapter 13 and be able to afford the restructured payment proposed, one must have consistent income over the last 8-10 months and should also be deemed to continue similar income over the next 3-5 years. The source of income or job must be secured to be eligible for Chapter 13. The reason being any lapse in payment as per the revised payment plan leads to zero discharge and failure of bankruptcy terms. The debtor might land back to square 1.

  • Household income over the mean income for the respective state

In chapter 7 there is a means test, where your income must be below the ceiling specified. Here for chapter 13, the same should be reversed. The concept to test means test for chapter 7 is to provide a cushion to poor people and not allow its misuse. Hence, if the net household income of the filer is below the mean income as per the resident state, the filer would be well-off filing under chapter 7. There are several calculations that go for calculating eligible expenses and net household income. Make sure, you are on track with the calculations with assistance from top attorneys from Los Angeles & Dallas, TX at 888-297-6203.

  • Characteristics of the assets

If a filer has more exempt assets, then chapter 7 is a more obvious option. However, if the filer has more non-exempt assets, and safeguarding them is the objective, Chapter 13 is the more obvious choice.

Characteristics of Chapter 13

Chapter 13 has the following characteristics-

  • The timeframe for chapter 13 is probably the longest and might take about 6 years for the entire process to complete
  • Chapter 13 protects most or all your assets based on the net disposable income
  • Chapter 13 helps in making the debt payments manageable by discharging some of the unsecured debt and by spreading the repayment across the next 3-5 years based on the disposable income
  • It is important to not fall behind any of the revised payments suggested or approved by the bankruptcy court or it could lead to zero discharge and foreclosure of the asset
  • During the repayment phase, the bankruptcy filer is solely responsible for personal liabilities, expenses, etc. Any new debt created should be approved by the bankruptcy court may be a mortgage or any other as well. Without the consent of the bankruptcy court, the filer might not be able to make any major financial commitments.