Brett N. Rodgers

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Monday-Friday 8:00-4:30

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About Chapter 13

Chapter 13 is a consumer reorganization Chapter of the Bankruptcy Code. Chapter 13 is designed for individuals with regular income who are unable to pay their debts as they become due. An individual may qualify so long as their unsecured debts are less than $383,175.00 and their secured debts are less than $1,149,525.00. These amounts are adjusted periodically to reflect changes in the consumer price index. Chapter 13 is commonly utilized by individuals who have missed mortgage payments, owe non-dischargeable taxes or child support debts, and want to utilize lien stripping provisions of the Bankruptcy Code, that would be unable to utilize Chapter 7 without losing some of their non-exempt assets.

Once a petition is filed under Chapter 13, the individual submits a repayment Plan to the Court for the Court's approval. Once the Chapter 13 Plan is confirmed, the individual makes monthly payments to the Court appointed Trustee under the Chapter 13 Plan. The Plan must meet certain requirements regarding treatment of Creditors and the Debtor's disposable income to be confirmed. The Chapter 13 Plan allows the individuals to repay their outstanding debts in installments over a three to five year period under the Court's supervision.

The Chapter 13 Plan is binding on both the Debtors and the Creditors. After completion of the installments under the repayment Plan, an Order of the Court is usually entered discharging the remaining  discharageble debts owed. The Debtors have an absolute right to dismiss their Chapter 13 bankruptcy case. The bankruptcy case may also be dismissed in the event the individuals fall behind in their payments or are unable to make a payment which is due under their Plan.Some other reasons why a case might get dismissed are:

1. Failure to comply with an Order of the Court.
2. Failure to comply with the Trustee's directive.
3. Failure to initiate Plan payments.
4. Failure to make Plan payments.
5. Failure to amend a Chapter 13 Plan as instructed at hearing.
6. Making Plan payment with a personal check that was returned for non-sufficient funds.

Many cases are dismissed or converted to Chapter 7 prior to completion of the entire term of the Plan. Chapter 13 bankruptcy requires discipline and the ability to live within a strict budget. Upon confirmation, the Court may enter an Order requiring that payments may be deducted from the Debtor's wages during the bankruptcy case. If the Debtors have a job with regular income, the Bankruptcy Court will probably order that the Debtors' Plan payments be made automatically by the Debtor's employer, and sent to the Court appointed Trustee. This is not intended to be a comprehensive description of Chapter 13 and specific questions should be directed to an attorney.