Bankruptcy filed under Chapter 13 presents people a range of advantages over liquidation under a Chapter 7 bankruptcy. Possibly most significantly, chapter 13 offers consumers an opportunity to protect their homes from foreclosure. By filing under this chapter, people can prevent foreclosure proceedings and may cure overdue mortgage payments over time.
Even so, they will have to still make all mortgage payments that come due during the chapter 13 bankruptcy plan when they’re due. Yet another plus of chapter 13 is that it allows consumers to reschedule secured debts (other than a mortgage for their primary residence) and extend them over the life of the chap 13 plan. Doing this may lower the payments.
CH 13 also has a special provision that shields third parties who are accountable to the debtor on “consumer debts.” This provision may safeguard co-signers. Lastly, chap 13 acts like a consolidation loan under which the individual makes the plan payments to a chapter 13 bankruptcy trustee who then directs payments to creditors. Men and women will have no one on one contact with creditors while under chapter 13 bankruptcy protection.
Just about any person, even if self-employed or operating an unincorporated business, is a candidate for chapter 13 bankruptcy relief as long as the individual’s unsecured debts are less than $360,475 and secured debts are less than $1,081,400. These sums are altered routinely to mirror changes in the consumer price index. A corporation or partnership may not be a chapter 13 debtor.
Individuals are unable to file under bankruptcy filed under chapter 13 or any other chapter if, during the former 180 days, an earlier bankruptcy petition was dismissed due to the debtor’s willful failure to appear before the court or conform with orders of the court or was voluntarily dismissed after creditors sought relief from the bankruptcy court to recover property upon which they hold liens. Moreover, no individual can be a debtor under bankruptcy filed under chapter 13 or any chapter of the Bankruptcy Code unless he or she has, within 180 days ahead of filing, received credit counseling from an approved credit counseling agency either in an individual or group briefing. There are exceptions in emergency circumstances or where the U.S. trustee (or bankruptcy administrator) has determined that there are not enough approved agencies to offer the needed counseling. If a debt management plan is formulated in the course of required credit counseling, it needs to be filed with the court.
If you’re considering bankruptcy, talk to a local MA Chapter 7 lawyer about your options. An experienced MA Chapter 7 lawyer can provide you with which options are right for you.
