CHAPTER 13 BANKRUPTCY EXPLAINED
A Chapter 13 case involves remitting a monthly payment to a trustee for 3 to 5 years. Similar to Chapter 7, the Chapter 13 cases deals with all your creditors. Creditors are prohibited from all collection activities. For your case to be accepted (also know as having your chapter 13 plan confirmed), you need to meet the following conditions:
1. You have regular monthly income. For example, consistent wage income or any other income source that does not substantially vary from month to month.
2. After paying all reasonable and necessary household expenses, money is left over to make the monthly plan payment.
3. The proposed plan pays in full certain creditors. Generally, these creditors include Federal and State Income Taxes that became due in the three previous years, and all delinquent child support payments. Any secured creditors will also have to be properly dealt with in a chapter 13 plan.
WHY WOULD I WANT TO FILE A CHAPTER 13?
There are many reasons. The most common reasons are as follows:
1. Your income exceeds the Indiana Median Income for your household size.
2. The assets you want to retain substantially exceed the exemption limits.
3. You are ineligible to file a chapter 7 case due to a previous filing in the previous 8 years,
4. You are behind on mortgage payments with a home you desire to retain.
5. You are behind on vehicle payments, or the vehicle was recently repossessed, and you desire to retain the vehicle.
6. You have substantial tax debt in which your wages are or about to be garnished.
7. You have a wholly unsecured second or third mortgage you wish to discharge
AM I ELIGIBLE FOR CHAPTER 13 IF I HAVE FILED CHAPTER 7 IN THE PAST?
Should you be ineligible to file a Chapter 7 case due to a previous chapter 7 case filing in the past 8 years, you are always eligible to file a Chapter 13 case. Under Chapter 13, you will receive the same protection from your creditors as you would under Chapter 7. You will be required to remit a monthly plan payment over a period of 3 to 5 years. Depending on your circumstances, the plan payments may be as small as $150 monthly. If the previous Chapter 7 case was filed more than four years of the chapter 13 case, you will receive a discharge of your debts at the conclusion of your plan payments. Your creditors will forever be barred from collection the balance due on their claims. If the previous Chapter 7 case was filed within four years of the chapter 13 case, you will not receive a discharge of your debts at the conclusion of your plan payments. In other words, your creditors will be able to resume all collection activities for the balanced owed.