What Is Chapter 13
Chapter 13 bankruptcy is a repayment bankruptcy in which you repay part or all of your debts over time and eliminate the rest.
Reasons to File Chapter 13
Chapter 13 is filed primarily to save your home from foreclosure or to remove a 2nd trust deed against your home through the lien stripping process.
You can permanently stop foreclosure of your home by proposing a Chapter 13 plan that repays all of your missed mortgage payments over period of 36-60 months.
If the value of your home is lower than the balance of your 1st mortgage, then you may be able to remove your 2nd mortgage through the lien stripping process.
What You Repay
You may have to pay a portion of your credit card debt, medical debt and other unsecured debt, in a Chapter 13. It all depends on your income.
The Chapter 7 bankruptcy Means Test, which is applied in Chapter 13 cases, will determine if and to what extend you must repay a portion of your credit card debt.
Debt Limits
To qualify for Chapter 13, you also have to be under the debt limits. If you have too much debt, you will not qualify for Chapter 13 bankruptcy.
Plan Confirmation
If you qualify to file Chapter 13, then next hurdle is to get the court to confirm your Chapter 13 plan. Many Chapter 13 plans are denied and cases dismissed, especially when filed by the novice practitioner. Experienced Chapter 13 practitioners, in contrast, have a very high rate of successfully confirming Chapter 13 plans.
Discharge
Once your Chapter 13 plan is confirmed, all you have to do is to make your payments and otherwise comply with the plan and once you are completed you will obtain the relief you requested in your Chapter 13 case. This typically includes a discharge (elimination) of all of your debts than can be discharged under bankruptcy law, as well as a lien strip of your 2nd trust deed in appropriate situations.
Mark Aalam,
San Diego Bankruptcy Lawyer
Owner of Bankruptcy Legal Center in San Diego, California
Sources: none (all content written by Mark Aalam)