The Basics

Chapter 13, entitled Adjustment of Debts of an Individual with Regular Income, allows individuals with a steady income to reorganize and develop a plan to repay all or part of their debts. This option is best for those who want to get rid of creditors collection efforts, but still repay their debts.

Debtors develop a repayment plan in which all debts are consolidated into one monthly payment made to creditors over a period of three to five years by a court appointed trustee.

Chapter 13 is different from chapter 7 in that it allows the debtor to remain in possession of their assets. The debtor also does not receive an immediate discharge of debts — or a release of responsibility of debts — since the debtor chooses to repay these debts through a payment plan.

Payments

Chapter 13 is an excellent option for those looking to avoid liquidation of assets. If the debtor’s income meets the state and court’s applicable state median, assets can be saved, unless the debtor wishes to liquidate.

Chapter 13 acts like a consolidation loan in which the debtor makes their planned payments to a chapter 13 trustee who then distributes the funds to creditors.

The debtor no longer has any contact with creditors while under the protection of chapter 13.

Eligibility

Eligibility for Chapter 13 is based on the debtor’s amount of secured and unsecured debts.

Secured debts are debts backed by a pledge of collateral, mortgage or other lien or a debt for which the creditor has the right to pursue specific pledged property upon default.

Unsecured debts are any type of debts not collateralized by a lien,

To qualify debtors must:
•Have unsecured debts of less than $336,900
•Have secured debts of less than $1,010,650

Benefits of filing under Chapter 13

Many choose to file under Chapter 13 for its many benefits. These may include:
Keeping your assets. Filing under chapter 13 will allow you to keep assets from being liquidated, unless you choose otherwise.

Stopping foreclosures. Chapter 13 will stop a foreclosure up to the day before the lender is set to seize the home.

To begin the process of filing under chapter 13 contact Clark & Washington, P.C. today at 770.488.9320 for your free consultation.