Chapter 13 Bankruptcy – Pay Your Debts Over Time
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| Chapter 13 is a type of bankruptcy in which you pay your unsecured debts (for example, credit card debts) in whole or only in part in one payment each month for a period of three or five years. | |||
| • | Who is Chapter 13 for? | ||
| Chapter 13 is for individual people, including married couples and sole-proprietorship businesses. It is not for corporations of any type or partnerships. | |||
| • | Why would you want to do a Chapter 13? | ||
– When you can't get a discharge of debts in a Chapter 7 bankruptcy. – When you have property that you want to keep but would be lost in Chapter 7 because: 1. Exemptions wouldn't protect that property. In a Chapter 13, you get to keep that property in return for making the monthly Chapter 13 payments. 2. You can’t pay the back payments owed (amount in arrears) on secured property (often a house or car). In a Chapter 13, you get to pay off the amount in arrears in the monthly payments under the Chapter 13 payment plan. – When you own real property with second (or third, etc.) mortgages that aren't protected by equity in the property because the property is not worth as much as is owed on the first mortgage. In this situation, you may be able to remove ("strip") the lien on your property from the second mortgage loan in a Chapter 13, turning that mortgage debt into an unsecured debt (like credit card debt) that gets paid (possibly only in part) along with other unsecured debts in the Chapter 13 payment plan. | |||
| • | Are there debt limitations for a Chapter 13 bankruptcy? | ||
Yes. The limit on unsecured debt is $419,275 and the limit on secured debt is $1,257,850. The issue of what is secured debt and what is unsecured debt in the area of real estate debts is complex and will not be covered here. | |||
| • | What if you don't qualify for a Chapter 13 bankruptcy? | ||
| If you're in the farming (growing anything) business, you'll want to consider a Chapter 12 bankruptcy. Otherwise you'll need to consider a Chapter 11 bankruptcy. | |||
We are a debt relief agency. We help people file for bankruptcy under the Bankruptcy Code. | |||