Under Chapter 13, debtors are permitted to repay creditors, in full or in part, in installments over a three to five year period, during which time creditors are prohibited from starting or continuing collection efforts. A plan providing for payment over more three years must be for cause and be approved by the court. In no case may a plan provide for payments over a period that is more than five years.
Only an individual that owes, on the date of the filing of the petition, noncontingent,
liquidated, unsecured debts of less than $307,675.00 and noncontingent, liquidated, secured debts of less than $922,975.00, or an individual and such individual’s spouse, except a stockbroker or a commodity broker, that owe, on the date of the filing of the petition, noncontingent,
liquidated, unsecured debts that aggregate less than $307,675.00 and noncontingent,
liquidated, secured debts of less than $922,975.00 may be a debtor under Chapter 13. An individual can be self-employed or operating an unincorporated business. A corporation or partnership may not be a chapter 13 debtor.
There are exceptions to the qualifications for a debtor if the debtor is a “repeat filer” or willfully fails to appear before the court of fails to comply with orders of the
court or was voluntarily dismissed.
A Chapter 13 bankruptcy is sometimes filed when the debtor doesn’t have a
regular income but does have equity in real property which can be sold so that
creditors can be paid. A temporarily unemployed individual may file for Chapter
13 bankruptcy to hold off creditors until the individual is re-employed.
Individuals file Chapter 13 to stop foreclosure and to come current on their
mortgage arrears. Tax bills and Educational loan debts often cause individuals
to file for protection under Chapter 13. Individuals often file to spread
out their debt payments so that the payments are more manageable.
The above are just some of the reasons for filing a Chapter 13 bankruptcy. It is important for an individual debtor to seek a consultation with an attorney to discuss the benefits of filing under Chapter 13.