Chapter 13 bankruptcy is a court-supervised debt adjustment procedure, available for individuals with regular income, who have unsecured debts totalling less than $383,175 and secured debts totalling less than $1,149,525.
The Chapter 13 debtor files a bankruptcy petition which is virtually identical to the Chapter 7 petition, including a detailed financial statement and listing of assets and liabilities.
The filing fee for the court is $310.00. In addition, the debtor typically pays his attorney some portion of the total agreed-upon fee in advance.
The Chapter 13 debtor files a "plan", which provides for repayment of debts over a three to five-year period.
The plan is usually a form, five pages in length one page in length. The court appoints a Chapter 13 trustee, whose job it is to receive payments from the debtor, and to disburse funds to creditors.
The Chapter 13 trustee acts basically as a disbursing agent, and not as a liquidating trustee. The debtor remains in possession of all of his property, exempt and non-exempt.
Upon the completion of payments under the plan, the debtor typically receives a discharge of his debts, even if he has paid less than 100% of the debt with some exceptions. The first payment under the plan is due 30 days from the date the plan was filed.
Personally Designed Plans Make Repayment Easier
Most Chapter 13 plans provide for only a partial repayment of debt.
To be approved by the court, the debtor's plan must provide for the debtor to pay to the Chapter 13 trustee a sum equal to the debtors disposable income for at least 36 months, after taking into account the debtors regular monthly living expenses.
Also, the plan must pay the creditors at least as much as those creditors would receive if the case were in Chapter 7. Thus, the amount that will be repaid to creditors is dependent upon the debtor's income and assets. The debtor's plan also needs to be filed in good faith. Call The Law Offices of Jonathan Stone of Hackettstown, NJ today for a FREE consultation.
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