Chapter 13 bankruptcy is a flexible, powerful tool that can empower individuals and married couples to regain control over their finances by restructuring their debts. But Chapter 13 is not for everyone. Chapter 13 of the United States Bankruptcy Code is designed to allow consumer debtors to pay some or all of what they owe over a period of three to five years. Sometimes called a “wage-earners plan,” Chapter 13 enables individuals with a regular income to seek confirmation of a repayment plan. Chapter 13 is always a voluntary process and, under it, only a debtor is permitted to propose the plans terms. A debtor who has completed all payments under a confirmed Chapter 13 plan is entitled to discharge, in virtually every instance. However, a large proportion of chapter 13 debtors are not granted a discharge–typically because they fail to meet their plan obligations (often, without the benefit of an experienced bankruptcy lawyer or because they fail to make their plan payments).

The first and foremost benefit of a Chapter 13 bankruptcy is its ability to help you save your home from foreclosure. Often, people who fall behind on their mortgages find themselves unable to pay their mortgage arrearages and unable to catch up. Through a Chapter 13 Bankruptcy case, debtors are able to dictate the terms of repayment and can pay mortgage arrearages over a period of up to five years. In some cases, Chapter 13 debtors are able to force lenders to modify the terms of their mortgage. Chapter 13 bankruptcy provides the additional benefit of allowing people to keep property that they might not have been able to keep in a straight liquidation bankruptcy under Chapter 7 of the Bankruptcy Code. For instance, if a person owns more than one vehicle and cannot exempt both, they may still retain the property through a Chapter 13 reorganization. If you are underwater on a car loan, Chapter 13 may have allow you the option of “cramming down” the loan to match the value of the car.

Chapter 11 is designed for business debtors but certain consumer debtors may also reorganize under Chapter 11.
The Bankruptcy Abuse and Consumer Protection Act of 2005 (the most significant overhaul of the Bankruptcy Code in recent years) put Chapter 7 out of reach for many highly compensated individuals by imposing a “presumption of abuse” for Chapter 7 debtors whose income exceeds a certain threshold. Likewise, Chapter 13 may be unavailable to an individual debtor whose non-contingent, liquidated secured and unsecured debts exceed certain limits. The Scylla and Charybdis of those limitations to debt and income typically mean that individuals engaged in business find Chapter 11 the only form of bankruptcy relief available to them.Those considering how a Chapter 11 bankruptcy case might impact their businesses or personal affairs should consult with an experienced insolvency lawyer. Insightful and creative bankruptcy counsel may mean the difference between successful reorganization and a fresh start or continued legal trouble and financial difficulty. When the stakes are high, you deserve your best chance to restructure. Rely upon the skill and experience of Robleto Kuruce.