What is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy is one form of personal bankruptcy used by many people. For the 12-month period ending September 30, 2012, more than 375,000 Americans used Chapter 13 bankruptcy to reorganize debt and save assets like their homes and cars. Forecasters predict that increasing auto loan and credit card debt and a pickup in housing foreclosures will cause total bankruptcy filings to increase by at least eight percent this year and many of those filings will be classified as Chapter 13 bankruptcy. Expert bankruptcy attorneys provide free evaluations so people can learn how to erase their debt!

Chapter 13 Bankruptcy Erases Debt

This type of bankruptcy is designed for people who have regular income to repay their debts but need additional time to do so. It stops vehicle repossession, home foreclosure, harassment from creditors, lawsuits, and wage garnishments. With Chapter 13 bankruptcy, an individual can consolidate and prioritize debt and may be able to reduce or eliminate some debt. While the bankruptcy payment plan is in place, the filer is protected from creditors, reducing the stress involved.

After filing a Chapter 13 bankruptcy petition with a bankruptcy court, an individual works with the assigned bankruptcy trustee to erase debt through a three to five-year repayment plan. The monthly repayment is based on what the individual can afford, determined by income and the amount of debt. An automatic stay imposed by the bankruptcy court enables most filers to remain in their homes and retain their possessions.

The current statutory filing fees for Chapter 13 bankruptcy are a $236 case filing fee and a miscellaneous administrative fee of $46. These fees are paid to the clerk of the court at time of filing and are separate from any charges associated with a bankruptcy lawyer. Chapter 13 bankruptcy can be filed by an individual or jointly by spouses and joint petitions require payment of a single filing fee and administrative fee.

Approximately 21 to 50 days after Chapter 13 bankruptcy filing, the bankruptcy trustee will hold a meeting between the debtor and listed creditors. The debtor must answer questions from the creditors and bankruptcy trustee regarding financial standing and proposed payment plan. Representation from a lawyer helps ensure the completeness and accuracy of the plan, making it easier for all parties to resolve issues.

As the filer makes Chapter 13 bankruptcy plan payments, the trustee allocates the funds to creditors per the plan terms. Some creditors may receive less than full repayment and a debtor may keep collateral securing a debt by repaying its value. Once all plan payments have been made, the bankruptcy is discharged, releasing the filer from included debts. Our expert team of chapter 13 bankruptcy lawyers will provide you with a 100% free evaluation so you can learn your rights!