When you file for Chapter 13 bankruptcy, you will be able to keep all of your property but are responsible for creating a repayment plan that helps you to pay off your debts over a set period of time (usually three to five years). This makes it a favorable option to some people over Chapter 7 bankruptcy, in which you may have to surrender some property but you get forgiveness for most of your debts.
In order to qualify for Chapter 13 bankruptcy, you must be able to show to the court that you can meet payment obligations during the span of your repayment period. Therefore, you must meet minimum income standards and you cannot have secured debts of more than $1,149,525 or unsecured debts of more than $383,175.
Before filing for Chapter 13 bankruptcy, you are required to go through credit counseling from an approved agency recommended by the United States Trustee’s office. You will also have to complete a variety of forms and pay a filing fee.
As you put together your repayment plan, you must be extremely detailed in describing your schedule of payments, the amount of your payments and how you will fulfill your responsibility for each individual debt. There will be priority debts that you must pay in full, that are typically priority claims like alimony child support, and certain taxes. You might have your unsecured debts partially forgiven, but you will still need to account for them in your repayment plan. The length of your plan depends on your income level and the amount of debt that you have.
If you suddenly find yourself unable to make payments during your repayment plan, you can work with the court to modify your plan or even discharge your debts by proving that you are enduring some form of economic hardship.
To learn more about your options and the process of Chapter 13 bankruptcy, contact D. Max Gardner, a certified bankruptcy specialist at 661-888-4335