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Bankruptcy Law Center
ABOUT CHAPTER 7
HOW CHAPTER 7 WORKS
THE CHAPTER 7 DISCHARGE
ABOUT CHAPTER 13
HOW CHAPTER 13 WORKS
THE CHAPTER 13 DISCHARGE
STATE EXEMPTIONS
COURT GUIDE
ROLE OF THE TRUSTEE
BANKRUPTCY TERMS
BANKRUPTCY & TAX LIABILITY
FREQUENTLY ASKED QUESTIONS

 

Chapter 13 Bankruptcy Background

Chapter 13 Bankruptcy is designed for individuals with regular income who desire to pay their debts but are currently unable to do so. The purpose of a chapter 13 bankruptcy is to enable financially distressed individual debtors, under court supervision and protection, to propose and carry out a repayment plan under which creditors are paid over an extended period of time.

Under Chapter 13 Bankruptcy, 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. Form 22c (Chapter 13 Means test) will determine the duration period of your Chapter 13 bankruptcy. In no case may a plan provide for payments over a period longer than five years. 11 U.S.C. § 1322(d).

When filing bankruptcy any individual, even if self-employed or operating an unincorporated business, is eligible for chapter 13 relief as long as the individual's unsecured debts are less than $307,675 and secured debts are less than $922,975. 11 U.S.C. § 109(e). A corporation or partnership may not be a chapter 13 debtor. Id.

An individual cannot file a chapter 13 bankruptcy or any other chapter if, during the preceding 180 days, a prior bankruptcy petition was dismissed due to the debtor's willful failure to appear before the court or comply with orders of the court or was voluntarily dismissed after creditors sought relief from the bankruptcy court to recover property upon which they hold liens. 11 U.S.C. §§ 109(g), 362(d) and (e).


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