Chapter 13 Bankruptcy Background
Chapter 13 Bankruptcy is designed for individuals with regular income who desire
to pay their debts but are currently unable to do so. The purpose of a chapter 13 bankruptcy is to
enable financially distressed individual debtors, under court supervision and protection,
to propose and carry out a repayment plan under which creditors are paid over an extended
period of time.
Under Chapter 13 Bankruptcy, debtors are permitted to repay creditors, in full or
in part, in installments over a three to five year period, during which time creditors are
prohibited from starting or continuing collection efforts. Form 22c (Chapter 13 Means test) will determine the duration period of your Chapter 13 bankruptcy. In
no case may a plan provide for payments over a period longer than five years. 11 U.S.C. §
1322(d).
When filing bankruptcy any individual, even if self-employed or operating an unincorporated
business, is eligible for chapter 13 relief as long as the individual's unsecured debts
are less than $307,675 and secured debts are less than $922,975. 11 U.S.C. §
109(e). A
corporation or partnership may not be a chapter 13 debtor. Id.
An individual cannot file a chapter 13 bankruptcy or any other chapter if,
during the preceding 180 days, a prior bankruptcy petition was dismissed due to the
debtor's willful failure to appear before the court or comply with orders of the court or
was voluntarily dismissed after creditors sought relief from the bankruptcy court to
recover property upon which they hold liens. 11 U.S.C. §§ 109(g), 362(d) and
(e).
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