Referred to in the Bankruptcy Code as “Adjustment of Debts of an Individual with Regular Income,” is designed for an individual debtor who has a regular source of income and is not available for corporations.
Chapter 13 can be a better choice for an individual because it enables the debtor to keep valuable assets and allows the debtor to propose a plan to repay certain creditors over a period of 36-60 months. It is rare that a debtor will be required to pay 100% of their debts through a Chapter 13 plan. In many cases debtors are not required to pay any of their unsecured debts through their Chapter 13 plan.
Chapter 13 is also available to debtors who do not qualify for chapter 7 relief. The debtor must make monthly payments to the chapter 13 trustee, who distributes the money to creditors according to the debtor’s chapter 13 plan, and the debtor does not receive a discharge until after the payments required under the plan are completed.
The debtor is protected by the Court from all collection activity while the plan is in effect. Additionally, more types of debts are eliminated under chapter 13 than under chapter 7.
Chapter 13 offers individuals an opportunity to save their homes from foreclosure. Individuals can stop foreclosure proceedings and may cure delinquent mortgage payments and/or property tax payments over time. Another advantage of chapter 13 is that it allows individuals to modify secured debts (other than a mortgage for their primary residence) and extend them over the life of the chapter 13 plan and possibly lower the payments. In some circumstances, judgment liens and junior liens can be completely removed from a debtor’s real estate.
Chapter 13 also has a provision that protects co-signers from collection efforts while the debtor is in bankruptcy.
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Christopher J. Kane, P.C.
Address: 2207 NE Broadway, Suite 100, Portland OR 97232
We are a debt relief agency.
We proudly help people understand their options and, if appropriate, help them file for bankruptcy relief under the Bankruptcy Code.