Chapter 13 Bankruptcy: Repayment Of Some Or All Debts Owed
By Susanne Robicsek, North Carolina Bankruptcy Attorney on Aug 14, 2007 in Benefits of Bankruptcy, Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, General Bankruptcy Information, North Carolina
Unsecured debts are often substantially reduced in Chapter 13 cases. Not everyone who files a Chapter 13 bankruptcy repays all the debts that they owe; in fact most do not. Chapter 13 bankruptcy is a repayment plan that allows repayment of some or all debts over a three to five year period depending on the situation of the person filing. Like Chapter 7, Chapter 13 can be a tool to help reduce unsecured debts, but Chapter 13 can do several things that Chapter 7 bankruptcy does not.
One factor determining how much is paid back on unsecured debts is what someone’s ability to pay is, or how much “discretionary income” you have after paying your regular and necessary living expenses.
Another reason to file Chapter 13 is that it helps catch up overdue mortgage or car payments, taxes and domestic support obligations. The payments are repaid, but by spreading them out over three to five years the balance may be easier to pay.
Under Chapter 13, you normally keep all of your property, both exempt and non-exempt, as long as you resume (or continue) making your regular payments on secured debts, and keep current under the repayment plan required by the bankruptcy laws. This plan may pay all of your debts, or just a portion; this will depend on your particular circumstances.
A repayment plan can be from three to five years, depending on how much income you earn. After finishing your payments, the balance of most of your unsecured debts are discharged.
You must have regular and ongoing income in order to be able to cover your ongoing living expenses and enough left over to make a plan payment. You must have less than $336,900 in unsecured debt (such as credit cards, signature loans, and medical bills) and less than $1,010,650 in secured debt (such as mortgages and car loans) to qualify for Chapter 13. (April 2007)
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