Chapter 13 Bankruptcy is a type of reorganization bankruptcy that allows individuals to create a plan to reorganize and consolidate their debt. Unlike Chapter 7 Bankruptcy, which liquidates many of a debtor’s assets, Chapter 13 Bankruptcy allows a debtor to keep more of their real and personal property if they agree to make agreed-upon payments to their creditors for a period of 3 or 5 years. If the debtor successfully completes the payments, most of their remaining unsecured debts will be forgiven.

If you are struggling with your debt but still have significant income, Chapter 13 bankruptcy may be a good choice. An experienced Chapter 13 Bankruptcy Attorney will be able to advise you about how a reorganization bankruptcy can help and whether Chapter 13 Bankruptcy is right for you.

Eligibility for Chapter 13 Reorganization

Unlike Chapter 11 Bankruptcy, which is another type of reorganization bankruptcy available only to businesses or individuals with very large amounts of debt, the eligibility requirements for Chapter 13 Bankruptcy are much more modest. In order to be eligible for Chapter 13 Bankruptcy, an individual must:

1. Have less than $1,149,525 in secured debts (debts secured by a creditor’s interest in real or personal property) and less than $383,175 in unsecured debts, such as credit card bills, medical bills, and other debts that are not secured by a creditor’s interest in real or personal property.
2. Have enough income to show the bankruptcy court that they can meet their repayment obligations. A debtor may include a spouse’s income even if that spouse has not filed for bankruptcy.
3. Have filed state and federal income tax returns for the last four years.
4. Complete credit counseling with an approved agency at least 180 days before filing for Chapter 13 Bankruptcy.

The Chapter 13 Payment Plan

Completion of Chapter 13 Bankruptcy is dependent on the debtor’s repayment of all required debts and some unsecured debt. Because of this, an important part of filing for Chapter 13 is the debtor’s proposal of a Chapter 13 Bankruptcy payment plan. The payment plan details the amount of debt the debtor will repay and how they propose to do so. After successful completion of a 3-year or 5-year payment plan, the debtor’s remaining unsecured debts are wiped away.

The payment plan must include repayment of all required debts. Required debts include:

• Priority debts such as child support or alimony;
• Long-term secured debts such as a mortgage or car loan (these debts do not have to be repaid in full during the payment plan, but payments must remain current);
• Other secured debts, such as a tax lien or a judicial lien, must be paid in full during the payment plan.

Unsecured debtors must receive as much in Chapter 13 Bankruptcy as they would in a Chapter 7 Bankruptcy. This amount is calculated based on the value of the debtor’s nonexempt property and must be paid during the payment period.

Contact a Union City Reorganization Bankruptcy Attorney Today

One of the first steps to filing for bankruptcy is determining which type of bankruptcy is the best fit for your particular financial situation. An experienced reorganization bankruptcy attorney can review your finances and assets to determine if Chapter 13 Bankruptcy is right for you. Call the Law Office of Melanie Tavare at 510-255-4646 or contact us online to find out if reorganization bankruptcy is right for you.

The Law Offices of Melanie Tavare is a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.