(continued)

3- Who's Eligible to File Chapter 13?

Only an individual with regular income who owes, on the date you file the petition, less than $250,000.00 in unsecured debt and $750,000.00 in secured debt. These debts must also be noncontingent and liquidated, meaning basically that they must be for a certain, fixed amount and not subject to any conditions.


4- Benefits of Chapter 13

Chapter 13 gives longer protection to debtors from the collection efforts of creditors; permits individual debtors to keep all their real estate and personal property, whether exempt or not, unless the debtor chooses to return certain items and eliminate the secured debt on those items; and provides individuals the opportunity to repay their debts through reduced payments, and creditors are pressured to accept those reduced payments.

Let's say you got behind on your home mortgage or the IRS is pressuring you unduly on some past-due taxes that are still less than 3 years old.  You can force the mortgage holder and the IRS into a reasonable payout in full on those arrearages.  Taxes over 3 years old become unsecured debts subject to only partial payments, unless they have filed a lien on your property and the lien is less than 10 years old.  Once you get the mortgage holder or IRS caught up, you could dismiss the case voluntarily for any reason; whereas a Chapter 7 cannot be dismissed voluntarily for any reason.

Another benefit is that the time your Chapter 13 bankruptcy shows on your credit report is less, so it takes less time to rebuild your credit. The reason you get this break is that the system honors you for paying as much as your debts as you can.  You may be able to discharge certain debts in a Chapter 13 that would be nondischargeable under other Chapters, for example, fraud judgments.