CHAPTER 13

What is Chapter 13?

Instead of filing with the intention of getting rid of all your unwanted debts, Chapter 13 allows you to repay some or all of your debts back over time, depending upon your income. Its what you do in order to cure a delinquent mortgage over time or solve a problem with the IRS or Franchise Tax Board. Chapter 13 is the debt adjustment plan or repayment program for Individuals with regular income who have the ability to repay some or all of their debts over time, usually 3-5 years. You qualify if you are self employed, own a business, or have other regular income that allows you to fund a plan. In Chapter 13, you make a single monthly payment to the Chapter 13 Trustee, who then distributes the proceeds to your creditors on a priority basis, and then prorated to unsecured creditors.

Who Qualifies for Chapter 13?

Any individual with regular income who has the ability to repay some or all of their debts over time, usually three to five years. You don't qualify if you don't have regular steady income. You can't file Chapter 13 if you are a partnership, corporation or a trust, or have secured debts in excess of $1,000,000 and or unsecured debts of more than $750,000.00.

Debt Consolidation and Reorganization
The “Plan.”

The Chapter 13 Plan

In the Eastern District of California, the Court uses a Chapter 13 Form Plan that was created the Judges in the District, with input from the Chapter 13 Trustees, and Bar. It simplifies the process of proposing and filing a Chapter 13 Plan. In Chapter 13, you make a single monthly payment of your net disposable income, above and beyond your ordinary and necessary living expenses to the Chapter 13 Trustee, who then distributes the proceeds to your creditors. In order to get a Chapter 13 Plan confirmed, you must, in addition to other things:

• Propose the plan in “good faith;

• Provide for the full repayment of all priority (tax) claims;

• Provide for the cure of any default of any secured claims;

• Provide for the payment in full of the present value of any secured claim;

• Pay your unsecured creditors no less than what they would receive in a Chapter 7 case.

Chapter 13 allows you to pay some or all of your debts back over time, usally 3-5 years

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