Chapter 13 bankruptcy requires you to make monthly payments to your creditors for up to five years. In contrast, chapter 7 bankruptcy lets you get out of paying almost all of your debts after just 4 months. Why would anyone want to file bankruptcy under chapter 13? Sometimes, chapter 13 bankruptcy is required. Congress thinks that people who make more than the median income should file chapter 13 bankruptcy unless they can prove that they really don’t have any disposable income to pay debts – in other words “overcome the presumption of abuse.” Other times, chapter 13 wage-earner plans are a great idea for debt adjustment. Under chapter 13 bankruptcy, you can pay some or all of your debts over a period of 5 years. The so-called “commitment period” is only 3 years if you make less than the “median income”. In exchange for these payments, you can keep property you have which a trustee would sell from under you in chapter 7 bankruptcy. So in chapter 13, you can:
- Save your house
- Keep your car
- Keep your property
- Save your business
In chapter 13, you make a monthly payment to the chapter 13 trustee. The chapter 13 trustee then keeps a percentage for his efforts, slices the rest of the payment into portions for each of your creditors and then makes a monthly payment to each creditor in accordance with your plan. Your plan can be creative and flexible. So talk with your lawyer about this if you have any questions or you need help in making your decision about filing chapter 13.
About David Leibowitz, Illinois and Wisconsin Bankruptcy Attorney
David Leibowitz holds a B. A. in Economics from Northwestern University and received his J.D., cum laude, from Loyola University of Chicago School of Law where he also served as Note Editor of the law review. Admitted to the Illinois and Wisconsin bars, he is the managing member of Lakelaw, an interstate law firm with offices in Chicago, Skokie and Waukegan in Illinois and Kenosha, Wisconsin. He is nationally recognized for his work in identifying and pursuing mortgage related claims in the context of bankruptcy. David is a member of both the Illinois and Wisconsin bars and has practiced in bankruptcy courts throughout the country. He is a member of the American Bankruptcy Institute where he is the Co-Chair of the Commercial Fraud Committee. He is ta frequent contributor to the ABI Journal and speaker at ABI events. He is an author and editor in chief of the American Bankruptcy Institute Fraud Manual published in 2010. He is also a member and Director of the National Association of Bankruptcy Trustees, a member and frequent speaker for the National Association of Consumer Bankruptcy Attorneys and numerous state and local bar associations. He is Board Certified by the American Board of Certification in both Consumer Bankruptcy Law and Business Bankruptcy Law. David is also the publisher of Lakeblawg, www.lakelaw.com/lakeblawg, a blog dedicated to consumer and small business bankruptcy and mortgage foreclosure defense.
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