Bankruptcy Chapter 13

Chapter 13 bankruptcy can be an incredibly powerful tool to help you get your finances back on track. Bankruptcy Chapter 13 can also be quite intimidating and confusing for some people. Here are some interesting facts that you might not know about Chapter 13.

1. Only people can declare Chapter 13

That’s right, only people can use Chapter 13. Corporations, LLCs and partnerships are not able to utilize Chapter 13. If a corporation needs bankruptcy help, it has to be in the form of Chapter 7 or Chapter 11. If your business is run as a sole proprietorship, you can use Chapter 13 to reorganize your finances.

2. You can’t have too much debt in Chapter 13

There are debt limits for Chapter 13 filers. Currently, your unsecured debt must be less than $383,175 and your secured debt must be less than $1,149,525. If your debts are in excess of these limits, Chapter 13 is not possible for you.

3. Chapter 13 will last either 3 or 5 years

Recent court decisions state that a Chapter 13 bankruptcy must either be three or five years long. There is no in-between. If you earn more than the median household income for your state, you will have to stay in Chapter 13 bankruptcy for five years.

4. There is no risk of losing your property in Chapter 13

Unlike in Chapter 7, there is no risk that the bankruptcy court will take some of your property. You can keep all of your property during Chapter 13. Caution: if you fail to make your Chapter 13 payments, the court can convert your case to Chapter 7. It is important to keep up with your Chapter 13 payments!

5. You are shielded from collection activity for the full life of the Chapter 13

All of your creditors that are included in your Chapter 13 have to live with the bankruptcy just like you do. This means that they are not able to harass you about your debts, sue you, garnish your wages or levy your accounts while you are in your bankruptcy. This gives you plenty of breathing room to reorganize your finances and get everything back on track!

Please call my office at (916) 333-2222 with any questions about bankruptcy Chapter 13 in Sacramento.

Attorney Rick Morin