About Chapter 13 Bankruptcy

Bankruptcy Ch. 13 is used by individuals or businesses that have steady income to resolve their financial difficulties under court supervision. When this type of petition is filed, a repayment plan is established to allow debt to be repaid over three to five years. When this chapter is used for bankruptcy, the assets of the debtor are retained fully by the debtor, unlike in other forms of court-supervised financial solutions. Due to changes in bankruptcy law in 2005, many people who would previously have been able to use Chapter 7 where debts are wiped out, now must use Chapter 13 for their cases.

To file bankruptcy under Ch. 13, the debtor must have less than $304,675 in unsecured debts and less than $922,975 in secured debts. If the case involves a man and his wife, these limitations are not doubled

A bankruptcy Ch. 13 discharge can not be granted for anyone who received bankruptcy discharge under Chapters 7, 11 or 12 within the last four years or anyone who has declared bankruptcy under Chapter 13 within the last two years.

A person that files bankruptcy Ch. 13 is permitted to keep their home if they successfully follow the repayment plan. If they do not, the home may be kept under martial ownership law or homestead exemption if certain conditions are met. The 2005 law, however changes the homestead exemption to no more than $125,000 if the home was purchased within the 40 months immediately prior to court filing of the bankruptcy or if there was fraud involved.

When filing bankruptcy Ch. 13, a person can keep their vehicle(s) provided they repay based on the repayment plan. If they do not, the vehicle can be taken by the creditors.

Bankruptcy Ch. 13, like all bankruptcies, is quite complex. It is far better to manage your money than to fall into the type of financial troubles that result in this type of court action. The court action will remain on your credit record for ten years.

Next article: About Chapter 7 Bankruptcy

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