Chapter 13 bankruptcy provides a solution to the burden and stress of unmanageable debt. The decision to file for bankruptcy is significant, and you should have as much information as possible before proceeding with your claim. To that end, below are answers to a few frequently asked questions about Chapter 13 bankruptcy.

Answers to Common Chapter 13 Bankruptcy Questions

What is Chapter 13 bankruptcy?

In a Chapter 13 filing, debts are renegotiated and restructured into a long-term repayment plan that typically lasts from three to five years. Under the supervision, protection, and guidance of the bankruptcy courts, the debtor satisfies all or an agreed-upon portion of their outstanding debts, without interest or fear of penalties and finance charges. The debtor makes regular monthly payments directly to the Chapter 13 trustee, who ensures that creditors receive their allotment of the funds.

Who can file for Chapter 13?

Any individual with less than $394,725 in unsecured debt and no more than $1,184,200 in secured debt can file for this type of bankruptcy. Employed people or people with a regular income are best suited to Chapter 13, as filers must make on-time plan payments every month for the foreseeable future.

Can all debts be included in a Chapter 13 plan?

While the majority of secured and unsecured debts are applicable in Chapter 13, you cannot incorporate some of them. These include student loans, alimony and child support, tax debts from the prior three years, and criminal restitution or fines. Also, you cannot roll over new debts incurred during the Chapter 13 plan period into the plan.

Can creditors seek payment from a cosigner for debt in Chapter 13?

It depends. If full repayment of the debt is happening via the Chapter 13 plan, the creditors cannot seek payment from the cosigner. But if only a portion of the debt is in the plan, the creditor can collect the balance difference from the cosigner.

A Chapter 13 bankruptcy attorney will answer your questions and guide you throughout the process. The team at Bender & Bender can help. With four decades of experience, they represent Wood County, WI, clients in both Chapter 13 and Chapter 7 bankruptcy claims. Start finding a clear path to debt relief, and schedule a consultation by calling Bender & Bender at (715) 423-4400. Visit the website for more information about their services.