Chapter 13 Bankruptcy

Chapter 13 is a Court supervised debt reorganization process for individuals with a regular source of income. An Individual who operates a business as an unincorporated sole proprietor can also use Chapter 13 to repay debts, but only by filing as an individual, and including the business-related debts for which he is personally liable.

With a Chapter 13 bankruptcy, the debtor utilizes his disposable income, usually repays at least a portion owed to creditors, making payments set up under a plan spanning a period of 3-5 years. Provided a debtor’s equity does not exceed certain limits, a Chapter 13 bankruptcy allows the debtor to keep property such as his home, vehicle and other assets, which may be exempt according to laws in his state. An added benefit of a Chapter 13 is the time the bankruptcy shows on a debtor’s credit report, which is less than with a Chapter 7, for example. And the time it takes to rebuild a credit rating, following a Chapter 13, is also less.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) initiated changes in the procedures for filing bankruptcy, which involve more stringent documentation and more restrictive qualification requirements. The law now requires individuals seeking bankruptcy relief to undergo credit counseling with approved counseling agencies, prior to filing a bankruptcy petition, and to obtain education in personal financial management from approved agencies before a discharge of debts is granted under Chapter 13.

When you are facing insolvency and wish to seek protection of bankruptcy, you will need the expertise of a bankruptcy attorney to guide you. At Bailey & Galyen, our bankruptcy attorneys can help you determine if you meet the qualifications to file for Chapter 13, or advise you as to whether another type of bankruptcy will be of greater benefit to you.