What Is A Chapter 13 Bankruptcy?
A Chapter 13 bankruptcy is akin to a payment plan however, unlike most payment plans, a Chapter 13 payment plan may not require you to pay all of your debt off. Under the Chapter 13 payment plan the debtor will pay off some of the past-due and current debts over 36 to 60 months. At the conclusion of the payment plan period, the remaining debts are discharged similar to a Chapter 7 proceeding. Unlike a Chapter 7 proceeding, you don’t have to turn over non-exempt property as the debtor will pay the value of the property during the payment plan period. One of the most important aspects of a Chapter 13 case is it will permit the debtor to keep valuable property such as a home and car and other secured property the debtor wants to keep. Also, it allows the debtor to cure a default on a mortgage or car loan over the payment plan period. Additionally, a debtor may be able to modify secured loans if the terms are very harsh.
The Criteria of Qualification For A Chapter 13 Bankruptcy
Similar to Chapter 7 bankruptcy, the debtor must take a pre-filling credit counselling course from an approved provider within a 180 days or six months of filing. An individual debtor must have what we call a regular income sufficiently stable and regular to enable such a person to make payments under the plan. However unlike a Chapter 7 to be eligible to file Chapter 13, an individual must not have debt over, the last figure was $394,000 of non-contingent liquidated unsecured debts, or over $1.1 million of non-contingent liquidated secured debts. Also an individual may not be eligible to file for Chapter 13 protection if they had a bankruptcy case dismissed with in the previous six months.
What Types Of Debt Can Be Discharged Under a Chapter 13 Bankruptcy?
Upon completion of all payments under the plan, the debtor will be entitled to a discharge. The discharge relieves the debtor of all debts provided for in the plan, except for certain debts specifically disallowed by the bankruptcy code. Like a Chapter 7 discharge, alimony or child support, certain taxes, and secured debts are not dischargeable. The debtor must certify that any domestic support obligations are current or paid in full before a discharge is allowed. Although the discharge in a Chapter 13 case is many times broader than a Chapter 7 case, however, there are still debts that are not dischargeable such as:
- Long-term debts with final payments due after completing the plan cured in the plan such as a mortgage;
- Debts incurred through false pretenses or fraud;
- Certain tax debts;
- Debts not listed in the bankruptcy;
- Debts for fraud as a fiduciary;
- Domestic support obligations;
- Most student loan debts;
- Certain drunk driving debts;
- Certain criminal fines and restitution orders;
- Debts for damages awarded in a civil action because of willful or malicious conduct by the debtor that caused personal injury or death.
What Assets Is Someone Allowed To Retain In a Chapter 13 Bankruptcy?
In Chapter 13 bankruptcy, you’re allowed to keep all of your property. You might have to pay back more of the un-secured debts during your Chapter 13 plan if you have nonexempt assets. Also, if one plans on keeping secured property, you must keep paying on that secured asset such as a home or a car.
The Major Difference Between A Chapter 7 And A Chapter 13 Bankruptcy
In a Chapter 7 proceeding, you are asking the bankruptcy court for immediate relief with the goal of discharging or liquidating all of your non-secured debts you owe to obtain a ‘fresh start’. Usually, Chapter 7 cases are non-asset cases allowing the debtor to keep all of their assets throughout the proceeding.
In a Chapter 13 proceeding, you are asking the bankruptcy court to set up a payment plan to pay back all or a portion of your debts over a period of time. The amount you have to repay depends on how much your income relative to the types of debts you owe, how much property you own and so forth.
For more information on Chapter 13 Bankruptcy In Iowa, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (515) 817-1339 today.
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