Chapter 13 Bankruptcy—Keep Your Assets and Reorganize Your Debts

Chapter 13 bankruptcy allows an individual to consolidate his or her debt while paying off some past–due and current debts. The debtor proposes a monthly payment plan to repay debt over a three to five year period depending upon the debtor’s monthly income and expenses.

More importantly, if the debtor qualifies, a Chapter 13 case allows an individual to keep valuable property which could otherwise be foreclosed upon or repossessed, if monthly payments are made according to the payment plan accepted in the bankruptcy proceeding. A successful Chapter 13 filing also halts penalties and interest on all credit cards and stays penalties and, in some cases, interest on IRS obligations.

The most common reasons an individual pursues a Chapter 13 filing is to repay mortgage arrears (back mortgage payments) and stop a repossession of their vehicle.

A Chapter 13 bankruptcy filing may be the route to repair your finances if you own non–exempt assets with significant equity.

A Chapter 13 bankruptcy filing may also be appropriate for individuals who have debt that is non–dischargeable in a Chapter 7 liquidation proceeding:

Just like in a Chapter 7 proceeding, the individual is required to attend a meeting of creditors. This meeting of creditors is conducted by the Chapter 13 trustee. The trustee will ask each individual debtor questions concerning all of his or her assets and liabilities. Creditors can also ask questions at this meeting, but rarely do any creditors attend. Typically, you can expect the meeting of creditors to last less than 5 minutes.

A Chapter 13 debtor receives his or her discharge upon the completion of the Chapter 13 plan payments.