The Law Office of Sara Gossman

Chapter 13 bankruptcy is often referred to as "reorganization bankruptcy" because all of your debts are put into one court-approved plan where one monthly payment is made for a period of three to five years depending on your income. 

In most Chapter 13 plans, only a portion of what you currently owe to your creditors is paid over the three to five year period.  You  make one payment to a single Chapter 13 Trustee who then pays your creditors a pro rata share of what is actually owed.  The portion of your debt that remains at the end of your plan is canceled or discharged. 

Chapter 13 is the more complex of the two chapters of consumer bankruptcy. Chapter 13 bankruptcy is available to individuals, even if self-employed or operating an unincorporated business.  A corporation or partnership may not be a chapter 13 debtor.

Chapter 13 offers individuals a number of advantages over liquidation under chapter 7.  Perhaps most significantly, chapter 13 offers individuals an opportunity to save their homes from foreclosure.   By filing a Chapter 13 bankruptcy, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time without penalties. 

Under certain circumstances, it is even possible to eliminate some second mortgages in a Chapter 13 bankruptcy.

Chapter 13 also has a special provision that protects third parties who are liable with the debtor on "consumer debts." This provision may protect co-signers.

Although many debts can be discharged in Chapter 7, some can only be discharged in a Chapter 13. Chapter 13 is a powerful tool that gives the debtors the opportunity to regain control of their financial futures.

An individual is eligible for chapter 13 relief as long as the individual's unsecured debts are less than $360,475 and secured debts are less than $1,081,400.   See 11 U.S.C. § 109(e). These amounts are adjusted periodically to reflect changes in the consumer price index.

Chapter 13 bankruptcy is extremely complicated.  Please contact us now to let our attorneys help you get on your way to a fresh financial start.   303-301-2650 or sara@saragossmanlaw.com