Bankruptcy - Chapter 13 | Consumer Debt Group


Chapter 13 - Individuals' Repayment Plans
A discharge voids any judgment on a discharged debt and prohibits any action to collect a discharged debt. A co-debtor's liability is not affected.

A. Who is eligible? Individuals (not partnerships or corporations) with regular income and unsecured debts of less than $290,525 or secured debts of less than $871,550.

B. Voluntary Filing Only A Chapter 13 case can be initiated by the filing of a voluntary petition only. A trustee is appointed.

C. Automatic Stay On the filing of a petition, an automatic stay enjoins creditors from taking action against co-obligors of the debtor. If a creditor asks to vacate the stay against a co-debtor, unless written objection is filed, twenty days later the stay against the co-debtor is automatically terminated without a hearing.

D. The Repayment Plan The plan must provide for (1) turnover to the trustee of the debtor's future income, (2) full payment of all claims entitled to priority, and (3) the same treatment of each claim within a particular class.
Filing and Confirming the Plan Only the debtor can file a plan, which the court will confirm if (1) the secured creditors accept it, (2) it provides that creditors retain their liens and the value of the property to be distributed to them is not less than the secured portion of their claims, or (3) the debtor surrenders the property securing the claim to the creditors. Payments under the Plan The time for payment must be less than three years (five years, with court approval). The payments must be timely, or the court can convert the case to a liquidation or dismiss the petition. Before completion of payments, the plan may be modified at the request of the debtor, the trustee, or an unsecured creditor. Objection to the Plan Over the objection of the trustee or an unsecured creditor, the court may approve a plan only if (1) the value of the property to be distributed is equal to the amount of the claims, or (2) all the debtor's disposable income during the plan will be used to make payments.