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Chapter 13 Bankruptcy


Chapter 13 is type of bankruptcy known as a Plan of Reorganization. It allows you pay your debt over a period of 3 or 5 years. This type of bankruptcy is typically used when you earn to much to qualify for a Chapter 7, have non-exempt assets, or are facing foreclosure on a home that you want to keep. Chapter 13 bankruptcy provides some flexibility that is also helpful in addressing some tax situations.

What is the process for filing a Chapter 13 bankruptcy?

  1. You must complete an approved Credit Counseling Course
  2. You prepare and file your bankruptcy Schedules, Statement of Financial Affairs, and Plan of Reorganization.
  3. You must attend your Meeting of The Creditors about 45 days after filing.
  4. About 30 days after your Meeting of the Creditors, a Hearing on the Confirmation of your case will be held.
  5. Before you complete your plan payments you must complete a Financial Management Course
  6. If you make all your payments over the life of your bankruptcy you will receive a discharge of your debt.

How does Chapter 13 Bankruptcy stop Foreclosure?

My clients find themselves facing foreclosure for many reasons. Most often the cause is unexpected expenses like medical bills or family issues. Once you fall behind on your house payment it is very difficult to catch up. Soon, you will receive a notice from an attorney representing the mortgage company telling you your house will be foreclosed on. Most of my clients call the mortgage company to try and resolve the problem but the Mortgage company wants the FULL BALANCE!

A Chapter 13 Bankruptcy will stop the foreclosure from taking place. 11 USC 362 creates an “Automatic Stay” which makes any collection activity, including foreclosure, illegal. This turns the tables on the Banks and mortgage companies and gives you back some power. You will be able to catch up the past due balance over the next 3 or 5 years.

How do I fund a Chapter 13 Plan?

When you file for Chapter 13 Bankruptcy must demonstrate to the Court that you can afford to make your Bankruptcy payments and maintain your regular living expenses. Common sources of funding are :

  • Wages from a Job
  • Social Security Retirement or Disability
  • VA Disability
  • Self Employment Income
  • Child Support or Spousal Support Payments

Want more information?

There are a lot of good sources of additional information on Chapter 13 Bankruptcy. The Court provides some basic information about Chapter 13 Bankruptcy. http://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chap...

You can always contact me for more information. My number is 817-494-3344.