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Chapter 13

Chapter 13 bankruptcy allows a debtor to restructure his or her debts and make partial payment over a three or five year period. The bankruptcy court must approve the plan and payments are made to a bankruptcy administrator for the duration of the payment period. Most disposable income must be used to pay debts during this timeframe. At the end of the payment plan, most remaining debts are discharged. Chapter 13 allows the debtor to retain most, if not all, property and is not subject to specific exemptions as with Chapter 7 bankruptcy.

Requirements for Filing

  • Must have enough disposable income to pay required debts over a 3 to 5 year payment term
  • No more than $419,275 in unsecured debt (updated April 2019)
  • No more than $1,257,850 in secured debt (updated April 2019)
  • No Chapter 7 discharge within the last 4 years
  • No Chapter 13 discharge within the last 2 years
  • No pending felony charge or any charge in which debtor may be found liable for debt arising from a criminal act, intentional tort, or willful or reckless conduct
  • Plan must be three years if current monthly income is less than state median
  • Plan must be five years if current monthly income is greater than state median

Advantages

  • Debtor is able to retain property in excess of Chapter 7 exemptions
  • After payment plan is successfully completed, remaining debt is discharged
  • Debts paid under payment plan are paid at prime plus 1 to 3% -- no high interest rates
  • Co-debtors are protected – If covered under Chapter 13 plan, creditor cannot continue to seek collection from co-debtor
  • Stops foreclosure proceedings – debtor must make current and future payments bat can catch up on past-due payments over time
  • Some debts that are not dischargeable under Chapter 7 are dischargeable under Chapter 13. Those include:
  • Debts for willful and malicious injury to property (still not injury to persons)
  • Debts incurred to pay non-dischargeable tax obligations (example, used a credit card to pay tax bill)
  • Non-criminal government fines
  • Debts arising from property settlements in divorce proceedings

Procedure

  • Client submits all required documentation and information to KYA Law
  • Client completes required credit counseling & provides certificate of completion to KYA Law
  • KYA Law completes bankruptcy petition and schedules
  • Client signs documents
  • KYA Law files petition electronically with court
  • Automatic stay is in place immediately upon receipt by the court
  • Clerk of Court notifies all creditors of pending action
  • Within a few days, Clerk of Court schedules the 341 meeting with the bankruptcy administrator (will usually be scheduled for about a month later)
  • Even if plan is not yet approved, within 30 days of filing, debtor starts making plan payments to bankruptcy administrator – MUST be current at time of 341 meeting
  • Attorney and client attend 341 meeting (creditors may also attend but rarely choose to do so)
  • Within 45 days, bankruptcy judge holds confirmation hearing to confirm payment plan
  • If court does not confirm plan, debtor may file a modified plan or convert to Chapter 7
  • Debtor makes payments to bankruptcy administrator over 3 or 5 year period
  • Debtor completes approved financial management course
  • Final Discharge

What Our Clients Are Saying

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Law Office of Kelli Y. Allen, PLLC

10150 Mallard Creek Rd, Suite 105
Charlotte, NC 28262

Phone: (704) 870-0340

Regular Hours
  • Monday - Friday 9:00 Am - 5:00 PM
  • Saturday & Sunday Closed

Also available by Text (704) 727-4310 or Live Chat

Service Area:

Charlotte and surrounding areas.