Chapter 13 Bankruptcy

WHO CAN FILE:Only individual persons with regular incomes [not, for example, corporations] who fall within the limits of secured and unsecured debts as set forth under Title 11, United States Code §109(e). A “Mandatory” Chapter 13—- lasting 60 months—- is a default option for Debtors who earn in excess of the applicable median “household income” for this State as set forth by the United States Department of Justice.

WHAT YOU CAN ACCOMPLISH:Many Debtors opt for Chapter 13 to accomplish things they could not do under Chapter 7. For example, a Debtor, through a confirmed Plan, can, among other things:

  • Reinstate a delinquent mortgage, cure arrearages, and repay delinquent Real Estates taxes over a period of 60 months
  • Eliminate second or even third mortgages on Homestead that are unsecured by any equity therein
  • Repay non-dischargeable Federal tax obligations on more favorable terms than an I.R.S. installment agreement; and be free of all collection activity for the duration of the Plan’s commitment period.
  • Not surrender anything that the Debtor wishes to keep, regardless of allowable exemptions, so long as the liquidation value of that asset is paid over the life of the Plan to the extent of all unsecured claims, whichever is less.
  • Repay non-dischargeable delinquent Domestic Support Obligations over the life of the Plan, free from garnishment or harassment.

DURATION:Mandatory Chapter 13’s have a 60 month commitment period. Non-Mandatory Chapter 13’s have a 36 month commitment period. Once the Plan has been completed the Debtor will receive a discharge.

HOW MUCH IS PAID UNDER THE PLAN: The greater of the Debtor’s “disposable income” as calculated by a statutory formula or the liquidation value of the Debtor’s non-exempt assets.