Chapter 13

Chapter 13

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What is Chapter 13 Bankruptcy?

When someone files for bankruptcy under Chapter 13 of the Bankruptcy Code, their aim is to have the opportunity to repay some or all the debts in their name on better terms (i.e. with lower or no interest).

Unlike Chapter 7, which requires a complete liquidation of assets, a Chapter 13 involves restructuring debts to allow the debtor to use whatever income he or she may have in the future to pay off creditors.

Thus, a Chapter 13 Bankruptcy is applicable for a debtor who has a regular income.

The United States Bankruptcy Code gives the debtor a period of 5 years within which the creditors must be paid back.

Your attorney will safeguard your interests while the process is carried out under the supervision of the Court.

How Does Chapter 13 Work?

While debtors are allowed to keep all of their property, the court approves an interest-free plan for repayment. A written plan is created providing details of all transactions that will occur under the plan and the duration of those transactions.

The repayment must begin within 30 to 45 days after the case has started. The transitory stage of paying a trustee who then pays a creditor, as in a Chapter 7 Bankruptcy, is sometimes eliminated in a Chapter 13 Bankruptcy.

Your attorney and accountant will prepare a repayment plan to best suit your situation and present it to the Court.

The one advantage of Chapter 13 over Chapter 7 bankruptcy is the full discharge option which is not applicable under a Chapter 7 filing. For example, if a debtor manages to complete all the required payments under the plan, he or she will be given a full plan discharge.

Another advantage of the Chapter 13 filing is that a repayment plan may be accepted by the Court even if creditors disagree with it.

The Court allows creditors to file objections to the plan.

About Peter Pappas

Peter is a tax attorney and certified public acccountant with over 20 years experience helping taxpayers resolve their IRS and state tax problems.

He has represented thousands of taxpayers who have been experiencing difficulty dealing with the Internal Revenue Service or State tax officials.

He is a member of the American Association of Attorney-Certified Public Accountants, the Florida Bar Association and The Florida Institute of Certified Public Accountants and is admitted to practice before the United States Tax Court, the United States Supreme Court, U.S. District Courts - Middle District of Florida