Chapter 13 – Bankruptcy

Chapter 13 – Bankruptcy Basics

This chapter of the Bankruptcy Code provides for adjustment of debts of an individual with regular income. Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years.

Background

{{A chapter|A phase} 13 {bankruptcy|insolvency|personal bankruptcy} is {also|likewise|additionally} called {a wage {earner|income earner}|a breadwinner}’s {plan|strategy}. It {enables|allows|makes it possible for} {individuals|people} with {regular|routine|normal} {income|earnings|revenue} to {develop|establish|create} {a plan|a strategy} to {repay|pay back|pay off|settle} all or {part|component} of their {debts|financial obligations|financial debts}. Under this {chapter|phase}, {debtors|borrowers} {propose|suggest|recommend} {a repayment|a payment|a settlement} {plan|strategy} to make {installments|installations} to {creditors|lenders|financial institutions} over {three|3} to {five|5} years. If the {debtor|borrower}’s {current|present|existing} {monthly|regular monthly|month-to-month} {income|earnings|revenue} is {less|much less} than the {applicable|appropriate|suitable|relevant} state {median|average|mean|typical}, the {plan|strategy} {will|will certainly} be for {three|3} years unless the court {approves|authorizes|accepts} a longer {period|duration} “for {cause|reason}.” (1) If the {debtor|borrower}’s {current|present|existing} {monthly|regular monthly|month-to-month} {income|earnings|revenue} is {{greater|higher|better} than|higher than|above|more than} the {applicable|appropriate|suitable|relevant} state {median|average|mean|typical}, the {plan|strategy} {generally|typically|normally|usually} {must|should|needs to|has to} be for {five|5} years. In no {case|situation|instance} {may|might} {a plan|a strategy} {{provide|offer|supply|give} for|offer|attend to} {payments|repayments|settlements} over {a period|a duration} {longer|much longer} than {five|5} years. 11 U.S.C. § 1322(d). {During|Throughout} {this time|this time around|this moment} the {law|legislation|regulation} {forbids|prohibits|restricts} {creditors|lenders|financial institutions} from {starting|beginning} or {continuing|proceeding} collection {efforts|initiatives}.|Under this {chapter|phase}, {debtors|borrowers} {propose|suggest|recommend} {a repayment|a payment|a settlement} {plan|strategy} to make {installments|installations} to {creditors|lenders|financial institutions} over {three|3} to {five|5} years. (1) If the {debtor|borrower}’s {current|present|existing} {monthly|regular monthly|month-to-month} {income|earnings|revenue} is {greater|higher|better} than the {applicable|appropriate|suitable|relevant} state {median|average|mean|typical}, the {plan|strategy} {generally|typically|normally|usually} {must|should|needs to|has to} be for {five|5} years. In no {case|situation|instance} {may|might} {a plan|a strategy} {provide|offer|supply|give} for {payments|repayments|settlements} over {a period|a duration} {longer|much longer} than {five|5} years.}

This chapter discusses six aspects of a chapter 13 proceeding: the advantages of choosing chapter 13, the chapter 13 eligibility requirements, how a chapter 13 proceeding works, making the plan work, and the special chapter 13 discharge.

Advantages of Chapter 13

{{Chapter|Phase} 13 {offers|deals} {individuals|people} {a number of|a variety of} {advantages|benefits} over liquidation under {chapter|phase} 7. {Perhaps|Possibly|Maybe|Probably} most {significantly|considerably|substantially|dramatically}, {chapter|phase} 13 {offers|provides|uses|supplies} {individuals|people} {an opportunity|a chance|a possibility} to {save|conserve} their {homes|houses|residences} from {foreclosure|repossession}. By {filing|submitting} under this {chapter|phase}, {individuals|people} can {stop|quit} {foreclosure|repossession} {proceedings|procedures|process} {and|as well as|and also} {may|might} {cure|treat|heal} {delinquent|overdue} {mortgage|home loan|home mortgage} {payments|repayments|settlements} {over time|in time|gradually|with time}. {Nevertheless|Nonetheless|However}, they {must|should|need to|have to} still make all {mortgage|home loan|home mortgage} {payments|repayments|settlements} that come due {during|throughout} the {chapter|phase} 13 {{plan|strategy} on|intend on} time. {Another|One more|An additional} {advantage|benefit} of {chapter|phase} 13 is that it {allows|enables|permits} {individuals|people} to reschedule {secured|protected|safe|guaranteed} {debts|financial obligations|financial debts} ({{other|various other} than|besides|aside from|apart from} {a mortgage|a home loan|a home mortgage} for their {primary|main|key} {residence|home|house}) {and|as well as|and also} {extend|prolong|expand} them over the life of the {chapter|phase} 13 {plan|strategy}. Doing this {may|might} {lower|reduce|decrease} the {payments|repayments|settlements}. {Chapter|Phase} 13 {also|likewise|additionally} has {a special|an unique} {provision|arrangement|stipulation} that {protects|safeguards|secures|shields} {{third|3rd} {parties|celebrations|events}|3rd parties} {who|that} are {liable|responsible|accountable} with the {debtor|borrower} on “{consumer|customer} {debts|financial obligations|financial debts}.” This {provision|arrangement|stipulation} {may|might} {protect|safeguard|secure|shield} co-signers. {Finally|Lastly|Ultimately}, {chapter|phase} 13 {acts like|imitates} {a consolidation|a combination|a debt consolidation|a loan consolidation} {loan|lending|car loan|funding|finance|financing} under which the {individual|private|specific} makes the {plan|strategy} {payments|repayments|settlements} to {a chapter|a phase} 13 trustee {who|that} {then|after that} {distributes|disperses} {payments|repayments|settlements} to {creditors|lenders|financial institutions}. {Individuals|People} {will|will certainly} have no {direct|straight} {contact|call} with {creditors|lenders|financial institutions} while under {chapter|phase} 13 {protection|security|defense}.|{Chapter|Phase} 13 {offers|deals} {individuals|people} a number of {advantages|benefits} over liquidation under {chapter|phase} 7. {Another|One more|An additional} {advantage|benefit} of {chapter|phase} 13 is that it {allows|enables|permits} {individuals|people} to reschedule {secured|protected|safe|guaranteed} {debts|financial obligations|financial debts} ({other|various other} than {a mortgage|a home loan|a home mortgage} for their {primary|main|key} {residence|home|house}) {and|as well as|and also} {extend|prolong|expand} them over the life of the {chapter|phase} 13 {plan|strategy}. {Chapter|Phase} 13 acts like {a consolidation|a combination|a debt consolidation|a loan consolidation} {loan|lending|car loan|funding|finance|financing} under which the {individual|private|specific} makes the {plan|strategy} {payments|repayments|settlements} to {a chapter|a phase} 13 trustee {who|that} {then|after that} {distributes|disperses} {payments|repayments|settlements} to {creditors|lenders|financial institutions}.}

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