CHAPTER 13 BANKRUPTCY
Chapter 13 allows individuals who have steady income to pay all or a portion of their debts under protection and supervision of the Court. Under Chapter 13, you file a bankruptcy petition and a proposed payment plan with the US Bankruptcy Court. Payment plans provide for payment of debts over 3 to 5 years. An important feature of Chapter 13 is that you will be permitted to keep all your assets while the plan is in effect and after you have successfully completed it.
Chapter 13 is available to those individuals with regular income who have less than $307,675 in unsecured debts (such as credit cards) and less than $922,975 in secured debts (such as mortgages or car loans). In a joint Chapter 13 case those limits are not doubled, instead they are applied to the total amount owed by the debtors.
A Chapter 13 discharge will not be granted if the debtor received discharge in Chapter 7, 11 or 12 withing the previous 4 years, or a discharge under Chapter 13 withing the previous 2 years.
CREDIT COUNSELING
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 launched a new era: With limited exceptions, people who plan to file for bankruptcy protection must get credit counseling from a government-approved organization within 180 days before they file. They also must complete a debtor education course to have their debts discharged.
As a rule, pre-bankruptcy credit counseling and pre-discharge debtor education may not be provided at the same time. Credit counseling must take place before you file for bankruptcy; debtor education must take place after you file. You must file a certificate of credit counseling completion when you file for bankruptcy, and evidence of completion of debtor education after you file for bankruptcy – but before your debts are discharged. Only credit counseling organizations and debtor education course providers that have been approved by the U.S. Trustee Program may issue these certificates. To protect against fraud, the certificates are produced through a central automated system and are numbered.
