Chapter 13 bankruptcy is an alternative available to those for whom neither Chapter 7 liquidation nor consumer credit counseling is an option. It involves creating a repayment plan to extend over a period of five years at most. During the replacement period, you will make monthly payments to a court-appointed bankruptcy trustee, who will distribute the assets to your creditors.
There are many potential benefits to filing Chapter 13 bankruptcy. For example, it stops collection actions against you and allows you to keep your property. As long as you abide by the plan and make timely payments, you may not have to pay back all of what you owe. However, to be eligible for Chapter 13, you must meet the qualification requirements.
Individuals and married couples may be eligible to file Chapter 13 if they meet the other requirements. If you own a business, you cannot file Chapter 13 unless you are a sole proprietor.
If you have filed for bankruptcy in the past, you may need to wait before you can file Chapter 13. For example, you must wait two years after a previous Chapter 13 discharge, and you cannot file Chapter 13 within four years of receiving a Chapter 7 discharge.
Chapter 13 requires that you have a regular income. However, this does not necessarily need to be from salary or wages that you earn from work. It can also come from sources such as spousal support, government benefits or pension plans.
To qualify for Chapter 13, neither your secured or unsecured debt can exceed a certain threshold. Secured debt refers to loans backed by collateral, e.g. mortgages and car loans. The upper limit for secured debt in Oregon is $1,184,200, while the unsecured debt limit is $394,725.
Chapter 13 bankruptcy does not discharge all debts, but it may give you more time to become current on mortgages, student loans, etc. You also have the ability to convert to a Chapter 7 bankruptcy if desired.