Chapter 13 is indeed a Blessing in disguise for all those who are planning to file for bankruptcy. This creates an opportunity for the debtors to pay back their debts without having to repossess their car or any other asset. Under chapter 13, you get to create your own repayment plan which can spread over a period of 3-5 years. Here, you can divide your debts to be able to pay back monthly.
When you file for bankruptcy under chapter 13, you also get automatically protected from all collection actions from the creditors. Also, once the repayment plan comes to an end, all unpaid debts are discharged. However, there are certain debts that must be paid irrespective of any discharges like – child support, student loan.
When should you choose chapter 13?
Debtors commonly prefer choosing chapter 13 when they file for bankruptcy in circumstances when-
- Debts like child support, taxes and marital property settlements which are non-dischargeable under chapter 7, can be wiped out under chapter 13.
- They have dues on car or house
- Assets acquired are worth more than the exemptions claimed
- Income crosses the Means test threshold
- You want to pay retirement fund loans which are not permitted under chapter 7
Other than priority claims (tax and child support), debts do not have to be re-paid in full when you file for bankruptcy under chapter 13. in fact only a fraction is paid back to the creditors. This is ascertained based on tests.
What all debts can you wipe off?
There are certain debts that cannot be discharged under chapter 7 like the domestic social support – alimony, child support and taxes. However, these debts can be discharged/wiped out under chapter 13.
With the help of repayment plan, you can easily catch up on your arrears by paying off these debts conveniently over a period of time.
Who all can apply for chapter 13 bankruptcy?
To be eligible to file for bankruptcy under chapter 13, you must be –
- An individual. A corporation or a partnership cannot file for bankruptcy under chapter 13
- Your income should be more than your reasonable living expenses.
- Your total liquidated debts must be less than 2,750,000 (a debts amount that can be easily calculated and is not left to chance)
If you are looking for an attorney to represent you for bankruptcy filing and guidance, you can get in touch with the renowned Recovery Law Group. To boon an appointment – https://www.recoverylawgroup.com/bankruptcy/