Chapter 13 Bankruptcy
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Chapter 13 bankruptcy involves a repayment plan where most debt is repaid over the course of 3-5 years. The repayment plan is calculated based on the filer's average monthly income for the six months preceding the bankruptcy.
If the filer's income is less than the state median income, a three-year plan is common. If above the state median income, a five-year plan is most common. |
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Chapter 13 has the power to, among other things, stop a foreclosure, cure a default, stop a wage garnishment, halt a civil proceeding, and protect a co-signer on a loan in default.
Due to the complexity of the bankruptcy code, it is not advisable to attempt filing Chapter 13 without a bankruptcy attorney. Of the individuals who file Chapter 13 without an attorney, only about 1 in 2500 obtain a discharge.
Due to the complexity of the bankruptcy code, it is not advisable to attempt filing Chapter 13 without a bankruptcy attorney. Of the individuals who file Chapter 13 without an attorney, only about 1 in 2500 obtain a discharge.
Eligibility of Individuals Who Own A Business
Individuals who are self-employed or operate an unincorporated business are eligible for Chapter 13 as long as their unsecured debts do not exceed a certain amount. This amount is adjusted periodically to reflect changes in the consumer price index. In most cases, individuals who own a corporation or other legal entity can still file, but certain things need to be completed before the individual files.
Although corporations and other legal entities do not qualify for Chapter 13, there are alternatives such as Chapter 11, including a new subchapter 5.
Although corporations and other legal entities do not qualify for Chapter 13, there are alternatives such as Chapter 11, including a new subchapter 5.