Chapter 13 Bankruptcy
Chapter 13 Bankruptcy offers those who are overwhelmed with debt a chance to get out of debt. Once approved, a filer begins a Chapter 13 Bankruptcy repayment plan, which lasts either 3 or 5 years. While some debts under this plan are reduced, others are eliminated entirely.
Also, immediately after filing for Chapter 13 Bankruptcy, all creditor collection attempts must cease, including wage garnishment, car repossession, and home foreclosure proceedings.
A bankruptcy attorney typically examines his or her client's entire financial situation, including all assets, debt-to-income ratio, and equity in a home or car, before advising on whether or not Chapter 13 Bankruptcy is the right choice for the client.
Debts Discharged with Chapter 13 Bankruptcy
Chapter 13 Bankruptcy can result in the following types of debt being discharged completely:
- credit card debt,
- medical bills,
- civil judgements,
- divorce-related debts owed to an ex-spouse, but not alimony
- a second mortgage or lien on a home when the first mortgage exceeds the home's current value,
- personal loans.
For many filers, the discharging of these debts is what makes their Chapter 13 repayment plan practical.
Debts Ineligible for Chapter 13 Bankruptcy
Some debts cannot be discharged with Chapter 13 Bankruptcy, including:
- child support,
- criminal penalties,
- student loans,
- federal and state taxes.
Also, recent debts within 6 months of filing for bankruptcy may not be discharged, such as credit card purchases for luxury items.
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Eligibility to File Chapter 13
In order to be eligible to file Chapter 13 Bankruptcy, a filer must meet certain requirements:
- Debts must not be too high: secured debts must not exceed $1,149,525 and unsecured debts not more than $383,175,
- Those wishing to file Chapter 13 must be current on all income tax filings,
- A filer must have enough disposable income to repay his or her debts under their Chapter 13 Bankruptcy plan
A bankruptcy attorney can discuss these and other conditions that affect Chapter 13 eligibility.
Protecting Your Home and Car
With a Chapter 13 Bankruptcy, property is kept, including homes and cars. But the bank may be looking to initiate home foreclosure proceedings, or automobile repossession, if the accounts are past due.
Happily, the act of filing for Chapter 13 Bankruptcy immediately puts a stop to any car repossession or home foreclosure efforts while the Bankruptcy Court approves a Chapter 13 Bankruptcy, and the repayment plan.
Florida Bankruptcy Exemptions
While a filer keeps his or her property with a Chapter 13 Bankruptcy, Florida's Exemptions still play a role, as they impact the amount that must be repaid under the bankruptcy plan. Florida's Exemptions include:
- any personal property up to $1,000,
- motor vehicle up to $1,000,
- wages up to $750 per week.