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Chapter 13 Bankruptcy Toolkit
Practical Law Toolkit w-023-1706 (Approx. 9 pages)
Chapter 13 Bankruptcy Toolkit
by Practical Law Bankruptcy & Restructuring
| Maintained • USA (National/Federal) |
Resources designed to assist individual Chapter 13 debtors and their counsel in understanding and preparing a bankruptcy case under Chapter 13 of the Bankruptcy Code.
A Chapter 13 bankruptcy provides relief only for an individual debtor with consumer debts that is able to make payments on these debts using regular, postpetition income. While Chapter 7 is a more popular bankruptcy option for individual debtors, an individual debtor may choose to reorganize under Chapter 13 because the debtor:
- Wants to keep valuable property, such as a home or car, and catch up on and continue to make payments on this property under a payment plan.
- Is not eligible for Chapter 7 because of the debtor's income.
- Has a lot of tax debt or other non-dischargeable debt.
- Needs more time to repay creditors.
A standing trustee is appointed to administer the Chapter 13 case and to collect and distribute payments under the plan. The debtor has the exclusive right to propose a payment plan. A Chapter 13 plan of repayment provides for payment of debts over a period of three to five years.
An individual is eligible for Chapter 13 if the individual's unsecured and secured debts are less than the maximum amounts stated in section 109(e) of the Bankruptcy Code. The amounts are adjusted periodically with the consumer price index.
An eligible individual includes:
- One with regular income who, as of the petition date, owes:
- unsecured, noncontingent, liquidated debts of less than $465,275; and
- secured, noncontingent, liquidated debts of less than $1,395,875.
- An individual with regular income and the individual's spouse, except a stockbroker (§ 101(53A), Bankruptcy Code) or commodity broker (§ 101(6), Bankruptcy Code), who, as of the petition date, owes:
- unsecured, noncontingent, liquidated debts that aggregate less than $419,275; and
- secured, noncontingent, liquidated debts of less than $1,257,850.
This Toolkit contains continuously maintained practice notes, standard documents, and checklists to help individual Chapter 13 debtors understand their restructuring options.