- Chapter 13 is used when you are ineligible for Chapter 7. This may be due to an excess of exempt property or because of failure of the means test. You must have a source of regular income and owe generally unsecured debts of less than $336,9000 and secured debts of less than $1,010,650.
- Chapter 13 is also used when you are behind on a mortgage and which to cure the arrears off over time.
- In a Chapter 13 you would with your bankruptcy attorney to propose a plan that will pay off your creditors over 3–5 years.
- The plan is based on a complicated means test based on statistical data for your family size and income.
- A trustee is elected who you pay your monthly payments.
- If you fail to make these payments, your case will be dismissed and you will owe the original amount.
If you don’t qualify for Chapter 7 because of your income, you must file for Chapter 13. If you own a house, a co-op or condo and are behind on your mortgage, file Chapter 13 to cure the arrears. Typically, the filer is asked to file a monthly payment plan that will eliminate the debt in three to five years. Payments are made to a Bankruptcy Trustee, who in turns pays Creditors.