Chapter 13 Bankruptcy

Please note: This presentation provides general information about the bankruptcy process.  Since the law is continually changing, some information in this program may be out of date, so it should not be relied upon as legal authority.  It should not be used as a substitute for reference to the United States Bankruptcy Code  and the Federal Rules of Bankruptcy Procedure, or to local rules of practice adopted by each bankruptcy court. This presentation should not substitute for the advice of competent legal counsel.  It is always best to consult an attorney about your legal rights and responsibilities in your particular case.


Loss Mitigation Video Series

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Filing Chapter 13 Bankruptcy

Hello, I am Licensed bankruptcy counselor Damian Falcone.  In this episode of our bankruptcy series I will be talking about filing a chapter 13 bankruptcy and discussing how it can help you restructure and repay your debts.

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In our last video we talked about your debt simply being discharged through a chapter 7 bankruptcy.  The purposes of a Chapter 13 bankruptcy are a little bit different.  Under chapter 13 Bankruptcy, the aim is to have the opportunity to repay some or all of the debts you owe.  Unlike Chapter 7 which involves liquidation of assets, this process involves restructuring debts which allows the debtor to use whatever income they may have in the future to pay off the creditors. So, filing Chapter 13 Bankruptcy is most applicable for a debtor who has a regular income, and can afford to make some regular payments.

The basic principle is that you will keep enough money to pay for your current living expenses, including housing, food, car, utilities, insurance, etc.  When you file under Chapter 13 Bankruptcy, you will be required to submit a detailed budget that includes your monthly living expenses and your take-home pay. Any income in excess of your expenses will become part of the bankruptcy estate and be paid to the bankruptcy trustee. The trustee then distributes the money to your creditors on a weighted basis determined by which debts have priority. The payment period generally lasts for three to five years. If you still owe money at the end of the payment period, all the remaining unsecured debts are forgiven.

Chapter 13 Bankruptcy allows any secured loans which will be paid off during the plan to be rewritten reflecting the current fair market value of the Asset. Meaning that if you owe more than an item is worth, the Judge can re-value the item down to present market value which would change the amount you owe.

As with a bankruptcy under chapter 7, there are some debts, such as taxes, child support, and student loans that cannot be discharged through bankruptcy.

Once considered a last resort, bankruptcy has evolved into an accepted method of resolving serious financial problems. If you are facing financial challenges, it is important to seek the counsel of an experienced bankruptcy attorney to determine whether filing a Chapter 13 Bankruptcy or chapter 7 is right for you.

I am Loss Mitigation Specialist Damian Falcone, and this is Get Settled.

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