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What is Chapter 13 and why should I consider it?

Chapter 13 bankruptcy allows you to submit an interest-free debt repayment plan through which you consolidate your debts and make a payment on your debt over a 3 to 5 year period. While in a Chapter 13 debt repayment plan, the creditors cannot collect from you, and the creditors are required by a Federal Court order to adhere to the terms of the plan.

To be eligible for a Chapter 13 repayment plan, you must be working or have a consistent source of income for your repayment plan to be approved by the court. Not only must you be able to pay for your monthly living expenses, but you must also be able to make a payment to the court to consolidate your debts.

Debts that are generally consolidated in a Chapter 13 bankruptcy are mortgage arrears, balances on vehicle loans, student loans, credit card debts and other unsecured debts. All outstanding debts must be included in the Chapter 13 bankruptcy consolidation.

There are debt ceilings to be eligible for chapter 13. In 2009, the secured debt may not be in an amount more than $1,010,650 and unsecured debt may not be more than $336,900.

There are many good reasons to file Chapter 13 – the top 10 are:

REASON # 1
The # 1 reason for choosing to file any bankruptcy – including a Chapter 13 bankruptcy is to obtain the automatic stay! Filing for protection under any chapter, barring a few prominent exceptions, halts all ongoing legal actions against the debtor as they are automatically stopped including foreclosures (THERE ARE EXCEPTIONS – so consult your attorney). more...
REASON # 2
The #2 reason for choosing to file a Chapter 13 bankruptcy is that you may retain 'Non-Exempt' Property. more...
REASON # 3
The # 3 reason for choosing to file a Chapter 13 bankruptcy is to retain 'Non-Exempt' Property. You may be able to keep assets which might otherwise be liquidated in a chapter 7 proceeding by proposing a repayment plan. more...
REASON # 4
The # 4 reason for choosing to file a Chapter 13 bankruptcy is that you maybe able to 'Cram Down' certain of your secured debts.  more...
REASON # 5

The # 5 reason for choosing to file a Chapter 13 bankruptcy is to take advantage of the Co-debtor Stay. You may be able to protect your co-signers from having to pay the co-signed obligations which might otherwise occur if you file a chapter 7 proceeding by proposing a repayment plan. more...

REASON # 6
The # 6 reason for choosing to file a Chapter 13 bankruptcy is that property can be sold free of liens and encumbrances and preserve your homestead protections. more...
REASON # 7
The # 7 reason for choosing to file a Chapter 13 bankruptcy is that some claims may be treated differently than others. You may be able to separately classify some claims in order to satisfy priority (tax or domestic support obligations (alimony and child support etc.) by proposing a repayment plan in chapter 13 to provide for that. more...
REASON # 8
The # 8 reason for choosing to file a Chapter 13 bankruptcy is that you may continue to operate your sole proprietor business and successfully reorganize it through a repayment plan. more...
REASON # 9
The # 9 reason for choosing to file a Chapter 13 bankruptcy is that you may not have to pay back anything to general unsecured creditors. more...
REASON # 10
The # 10 reason for choosing to file a Chapter 13 bankruptcy is that future (re)financing of a home and opportunities for future credit may be brighter. more...