Chapter 13 Bankruptcy

The two primary forms of consumer bankruptcy filed in Virginia are Chapter 7 and Chapter 13. For extensive material on chapter 7 bankruptcy, read more at our informational Chapter 7 Bankruptcy page.

What is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy is a form of consumer bankruptcy which offers debt relief. It differs from chapter 7 bankruptcy in that is allows for re-structuring or partial repayment of debt based on what the debtor can afford in the longterm. Chapter 13 bankruptcy reorganizes secured loans, can halt both foreclosure and repossession and even protect property including real assets.

In the Commonwealth of Virginia, any individual with income less than $1,081,400 (subject to change based on IRS standards) in secured debts such as loans on automobiles or homes IN ADDITION TO less than $360,475 (also susceptible to change) in unsecured debts such as medical bills, credit cards or other loans may file for chapter 13 bankruptcy.

Chapter 13 is significantly more complicated than chapter 7 bankruptcy and a lawyer is absolutely necessary (in this website’s opinion). Choosing a good lawyer can come down to a list of criteria ranging from proximity of the lawyer’s office to the price of the services. To hear more about Patel Law Firm’s competitively priced chapter 13 services, call 703- 539 – 8093, email bpatel@novapatellaw.com or contact us through this site on the “contact us” page.

Chapter 13 and Real Assets

A common question when declaring chapter 13 bankruptcy is whether the debtor will be able to keep valued possessions such as cars or homes. In the case of automobiles, many times the debtor is able to maintain possession of the vehicle because the debtor will be paying some of what is owed on the loan. This amount is based upon what their chapter 13 plans requires them to pay. The situation is generally the same with homes. Chapter 13, like chapter 7 bankruptcy, haults foreclosure proceedings and will allow the debtor to re-assume the debt (continue making payments), even if some are late/have been missed.

Individuals investigating chapter 13 bankruptcy are also commonly concerned about the fate of their other possessions. Because chapter 13 requires some repayment of debt, all items secured in the official chapter 13 payment plan is protected by law.

Chapter 13 and Other Forms of Debt

There are certain forms of debt that are “non-neogotiable” under a chapter 13 plan. These debts must be paid in full under the chapter 13 payment plan, although a chapter 13 plan may allow for them to be paid over time as opposed to immediately. Some of these forms of debt include:

  • Owed Taxes
  • Child Support
  • Certain Fines
  • Alimony

How Long Does Chapter 13 Take?

Fulfilling a chapter 13 payment plan can range, but generally are within the three to five year increment. After the final payment is made, an official discharge is issued and the debtor is no longer obligated by law to make payments on any remaining debts which may remain on the bankruptcy filing. However, as noted in the previous section, some debts will not be included in the official discharge.

Chapter 13 Fees

The required fees for filing a chapter 13 bankruptcy in the Commonwealth of Virginia are:

$274.00 to the bankruptcy court

A major difference between chapter 7 and chapter 13 is that the attorney’s fees are in face dictated by the court and are typically included in the chapter 13 payment plan.

Considering Chapter 13 Bankruptcy?

When considering chapter 13 bankrtuptcy, in many cases it is wise to first see if you qualify for chapter 7 bankruptcy which allows for discharge of all consumer debts. A good indicator of this is the passing and/or failing of the “means test”. To read more about the means test, click here (hyperlink to means test material). Although chapter 13 does not provide a full discharge, it can be a valuable tool for those seeking debt relief and allow for an individual to maintain a more stress-free life.

If you are considering either chapter 7 or chapter 13 bankruptcy, please contact Patel Law Firm. Consultations are free and questions are welcomed!