What is Chapter 13?

 

“Chapter 13” is a bankruptcy proceeding authorized by the

United States Code, Title 11, Chapter 13 (11 U.S.C. 13)

which allows individuals with regular income or small 

proprietary businesses to propose a plan of reorganization

to pay all or a portion of their debts.

 

In order to qualify, you must have regular income that allows your normal everyday expenses—such as food, housing, utilities, etc…., and have money left over to pay into your Chapter 13 plan.  In addition, the total amount of your debt owed must not exceed $360,475.00 for unsecured debt and/or $1,081,400.00 for secured debt, pursuant to 11 U.S.C. 109(e).

 

Once you have filed for Chapter 13 bankruptcy, you must start making payments to the Trustee by the 25th day of the month following your filing date.  For example, if you filed anytime during January, your first payment to the Trustee would be due February 25.

 

You must file all the required documents which includes a complete list of all of your creditors and all of your assets, the amount of your income and expenses, and what you propose to pay to the Trustee in your Plan of reorganization.  If the Court approves and “confirms” your Plan of reorganization, the Trustee will begin disbursing the payments he has received from you to your creditors in accordance with the approved Plan.  You must continue to make your Plan payments until the plan has been completed.  Most plans of reorganization are from 36 months to 60 months.

 

Also below is a listing of additional links that will provide you with useful information in regards to what a Chapter 13 is.

 

TERMS AND DEFINITIONS

 

US BANKRUPTCY COURT

EASTERN DISTRICT OF CALIFORNIA

DAVID P. CUSICK

CHAPTER 13 TRUSTEE