Filing Under Chapter 13 of the Bankruptcy Code

PLEASE NOTE:  The information contained in these pages should not be construed as legal advice.  It is merely a brief overview of what you can expect.  Bankruptcy is a complex process with many details.  You should consult our offices for a full analysis of your situation to determine if bankruptcy is right for you.

An Overview

Chapter 13 of the Bankruptcy Code is commonly referred to as the “Reorganization” Chapter.  Under this Chapter a consumer must make monthly payments to the Chapter 13 Trustee to payoff a portion of the consumer’s debt based on the consumer’s income and reasonable expenses.

This chapter may also be useful in protecting secured property that the consumer has fallen behind on.  For example, if a consumer is behind on their mortgage, then Chapter 13 may help them to come current on their mortgage payments and get them back on track.  Consumers are still able to exempt their property in the same manner that they would in a Chapter 7 proceeding.  You should contact our offices to see if a Chapter 13 would work for you.

The Discharge

As with a Chapter 7 Bankruptcy, a Chapter 13 will discharge you from your debts that are deemed to be “dischargeable.”  The Bankruptcy Code sets forth several debts that are not dischargeable including but not excluded to certain taxes, certain education loans, domestic support obligations, etc.  These types of debts will survive the bankruptcy and the consumer will remain liable on such.  It is very important that you provide our offices with all of your debts so that we may properly advise you as to the expected outcome for each debt.

Another important item regarding the discharge is its effect on mortgages, auto loans and other secured debts.  After concluding a successful Chapter 13 Bankruptcy, you will still be liable on the secured debts that have not been fully paid during the Bankruptcy.  As in the Chapter 7, the creditor maintains their rights in the property and may take possession of such if the consumer is in default.  Unlike, the Chapter 7, the creditor may also pursue the consumer for any “deficiency” balance that may exist after selling the property.

Is Chapter 13 Right for You?

Only a complete analysis by our attorneys can determine if a Chapter 13 filing is right for you.  If the debtor has no disposable income and no property is in jeopardy of being lost due to a default on loan obligations, then the Consumer pay be able to proceed under Chapter 7 of the Code.