While many debtors find Chapter 7 bankruptcy to be an attractive choice for filing due to the discharge available in three to six months, if they cannot pass the Means test, they must file for Chapter 13 instead. Known as the income-based bankruptcy, Chapter 13 offers many different benefits to the filer; for instance, if your home is under threat of foreclosure, it will be stopped immediately with the automatic stay, an injunction which prohibits creditors from pursuing any collections activity throughout the duration of the bankruptcy. If you are behind on payments, they can also be included in the repayment plan, allowing you to catch up-if you are also making your normal monthly.
And although it is high by most of our standards, there is a limit on the amount of debt that you can have in order to qualify for Chapter 13, as outlined by the United States Courts.
“Any individual, even if self-employed or operating an unincorporated business, is eligible for chapter 13 relief if the individual’s unsecured debts are less than $394,725 and secured debts are less than $1,184,200. 11 U.S.C. § 109(e).”
Everyone who files for Chapter 13 must list all the creditors they owe, along with the amounts. Income and all expenses must be revealed, along with a list of property and assets owned. Creditors hoping to receive payments from the trustee each month must file with the bankruptcy court within 90 days after the filer attends the 341 Meeting of Creditors.
If you are thinking about filing for Chapter 13, along with reducing the threat of foreclosure, you will also be able to look forward to rescheduling some secured debts, meaning that your payments are lower each month as they are stretched out in the repayment plan. Once the Chapter 13 is filed you will make payments to the Trustee who then distributes the funds to your creditors. This plan is completed within three to five years, and the debtor is expected to give all disposable income to the plan. Another benefit also is that unlike the Chapter 7 bankruptcy where it is listed on your credit report for ten years, the Chapter 13 is only listed for seven.
The experienced attorneys at Levitt & Slafkes, P.C. can answer all your questions regarding bankruptcy issues. Contact us today so one of our attorneys can evaluate your case and discuss the best options available to you. We are here to help! Call us at 973-323-2953, or contact us online to schedule a free consultation.
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