The Basics of Chapter 13 Bankruptcy

| October 15, 2014

Many people are unaware that there are multiple forms of bankruptcy. Most people are very familiar with Chapter 7 bankruptcy, but with Chapter 7 bankruptcy, you have to liquidate your assets and lose your property in order to repay your debts. Chapter 13 bankruptcy is very different. If you do not qualify for Chapter 7, then you most likely qualify for Chapter 13. 

Chapter 13 vs. Chapter 7 Bankruptcy

The Chapter 13 process is a very different from filing for Chapter 7. In Chapter 7, a bankruptcy trustee sells off your assets in order to satisfy unpaid debts to creditors. Chapter 13 allows you to keep your property and pay off your debts over a period of three to five years. In Chapter 7 bankruptcy, several debts can be discharged, but in Chapter 13, most of your debt needs to paid via a payment plan set up with the trustee.


Chapter 13 also offers many benefits that Chapter 7 does not. For example, Chapter 13 gives filers the opportunity to save their home from foreclosure. Traditionally, filing a Chapter 13 case is recommended if you have any valuable property that would otherwise not be exempt and would be lost in a Chapter 7 case.

Chapter 13 Eligibility

In order to qualify for Chapter 13 bankruptcy, you have to have the requisite disposable income to cover your debts solely from that income. Chapter 13 requires that you pay off your debts via a payment plan, so you have to show the court that you are capable of paying back your debts over a period of time. There is also a debt limit set in place, so if you have secured debts that exceed $1,149,525 and unsecured debts exceeding $383,175, you cannot file for Chapter 13 bankruptcy.

Chapter 13 Payments

You must make your payments on time in order to complete your plan. Certain debts, classified as priority debts, have to be paid off prior to others. Priority debts are debts that are traditionally never discharged during bankruptcy such as tax debt, alimony and child support payments. If for whatever reason you become unable to make timely payments, there is a possibility that you bankruptcy case will be dismissed. If this happens, you need to consult your Chapter 13 bankruptcy attorney immediately and take action.


Bankruptcy filing is a complicated process that has multiple implications on the financial future of you and your family. Here at Morgan & Morgan, we have more than 30 years of experience helping people with bankruptcy and debt relief. Visit our website today or call (706) 548-7070 for a free consultation.

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