A Chapter 13 Bankruptcy is also called a wage earner's plan because it allows people with a regular income to develop a plan to repay all or part of their debts. Through this process, the debtor has between 3 and 5 years to repay their debts through installments under a court approved plan. The benefit of a Chapter 13 Bankruptcy is that the debtor can keep his or her assets through a structured repayment process that is overseen by a trustee.
Debtors must complete mandatory credit counseling education from an agency approved by the United States Trustee's Office to determine if they earn a sufficient income to repay their debts. Those seeking to file a Chapter 13 Bankruptcy must also prove that their secured and unsecured debts are below federal-established limits, that he or she has a steady income and is not a business.
After filing for bankruptcy, a debtor must complete a second, mandatory credit counseling process within 180 days of the filing. The debtor is also required to propose a repayment plan that must meet the requirements of the bankruptcy code and is fair. The plan is reviewed by the creditors and the court and, once it is accepted by the bankruptcy judge, the debtor must begin making payments as per the established prepayment plan. Ongoing compliance with the repayment plan is monitored by the trustee and court, and once the debt is repaid the case is closed. If a debtor does not make the scheduled payments, their case may be dismissed and their creditors could seek to foreclose on property or take other debt-collection steps.
If you are considering filing a Chapter 13 Bankruptcy, please call our Tampa office in Carrollwood. When you call, an attorney will be happy to discuss your situation and determine your best options.