Chapter 13

Every day we seem to be greeted with news of an impending explosion of evictions and foreclosures to be generated by the lifting of current Pandemic restrictions.  If, when and for how much and for how long the Government will step to assist remains anybody’s guess. Chapter 13 of the U.S. Bankruptcy Code remains essential to protect homeowners and renters from the loss of their homes – but early action is necessary.

One of the stated purposes of the 2005 Bankruptcy Law revisions (BAPCPA) was to try to push more individuals into Chapter 13 repayment plans by compelling those with the “ability to pay” to do so. Congress adopted a “Means Test” Calculation whereby those with incomes above a certain level based on household size and the median income for the individual’s respective state would not automatically qualify to file basic Chapter 7 bankruptcy and such a filing would be deemed to be an “abuse.”

2+2 may not always equal 4. 

Depending on the type of plan, events may transpire post petition which could increase the amount necessary to satisfy the Chapter 13 obligations.  There may be additional administrative claims (for legal fees on application to the Court) or post petition creditor claims which could increase the amount necessary to fund the plan.

13 Myths About Chapter 13 Bankruptcy

So much is written and put out on the internet about the “Individual Repayment” option contained in the Bankruptcy Code under Chapter 13 that it probably is not surprising that much of it is either skewed for one reason or another - or is outright misinformation. This article includes some of the fairly constant refrains we as bankruptcy lawyers hear from clients to explain their hesitancy to consider Chapter 13. It is further an attempt to clarify and/or reassure individuals who may be considering Chapter 13 or desperately need its enhanced protections under the Bankruptcy Code.

Most people have heard of the basic Chapters of Bankruptcy filing; Chapter 7, 11 or 13.   Some are even aware of the less used provisions of Chapter 12 (for farmers or fishermen) or Chapter 9 (municipal entities) or even of late Chapter 15 (for foreign corporations).  But a hybrid approach called "Chapter 20" is getting a lot more attention.