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  Chapter 13 Bankruptcy -

     Chapter 13 bankruptcy is a debt adjustment plan for individuals with regular income, where payments are generally made over a 3-5 year period. It is available for individuals only, and no corporations or partnerships may file. Prior to 1979, it was called a wage earner's plan. It now includes not only wage earners, but also individual business operators (sole proprietors).

Other Chapter 13 Pages

      View these pages for more information on Chapter 13.

Advantages of Chapter 13
Filing Chapter 13
Meeting of Creditors
Filing a Plan
Creditors' Claims under the Chapter 13 Plan
Plan Confirmation
Order Confirming Plan (OCP)
Appealing Order Confirming Chapter 13 Plan
Modifying the Confirmed Chapter 13 Plan
Defaulting Payments
The Discharge
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     Only debtors with less than $ 360,475 of unsecured debt and $ 1,081,400 of secured debt are eligible. These limits are subject to adjustment every 3 years to reflect changes in the Consumer Price Index. The current limits went into effect on April 1, 2010. If the debts exceed either of these limits, the case is subject to dismissal, unless the debtor wants to convert the case to Chapter 11.


Unliquidated & Contingent Debt

     If the debtor has debts which are categorized as unliquidated or contingent, they do not count towards the debt limit. An unliquidated debt is one whose amount is not readily ascertainable, such as a tort claim. A contingent debt is one on which the debtor becomes liable only on the occurrence of some condition, such as a guaranty of a corporate debt that is not in default.

Current Monthly Income of Debtor

     The required term of the repayment plan depends on the debtor's Current Monthly Income, as reported on Form 22c. If the debtor is below the state median income, then the term is 3 years, unless the court for cause lengthens it. If the debtor has above-median income, then the plan is required to be 5 years. In no case can the plan exceed 5 years. There are some instances where the debtor may be able to complete his plan in less than 3 years, but this has not been fully and finally resolved. During the entire period of the plan, the automatic stay remains in effect, preventing creditors from taking any collection action against the debtor.

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Credit Counseling

     A debtor is required to have completed the required credit counseling course from an approved agency prior to the filing. There is a narrow exception, rarely applied, in cases where the debtor can show that such counseling was not available. If the course was not taken and the debtor is not found to be exempt, then the case is required to be dismissed.


Repeat or Serial Filer

     Where the debtor is a repeat filer, i.e., he was in a bankruptcy case in the last 6 months that was dismissed for debtor's willful failure to obey a court order, or where the debtor voluntarily dismissed his case after a creditor filed a relief from stay motion--the debtor is not eligible to file under Chapter 13 or any other Chapter.

Written by Henry Rendler

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