Chapter 13 – Wage Earner’s plan
A Chapter 13 case is frequently referred to as a “wage earners” case. This type of case is only available to individual debtors, not business entities.
(See chapter 7 or 11 for more information.) Through a Chapter 13 case, the client proposes a three to five year repayment plan in order to pay their creditors all or part of their debt over the term of the plan. Many people that cannot pass the Chapter 7 means test file for Chapter 13 relief. However, the Chapter 13 process can be also used to address certain unique situations such as reducing the debt on home or investment properties that are substantially under water (that is where the amount of the debt far exceeds the current value of the property). The most common use of Chapter 13 cases is to provide a mechanism for saving real property, most particularly a person's homestead property from foreclosure. There are many creative uses for Chapter 13 cases and many favorable financial results can be obtained by carefully structuring and proposing the Chapter 13 plan. However, Chapter 13 case filings are not without their specific rules and limitations. The most obvious is the debt limitation rule. In order to qualify for Chapter 13 relief, the client must have secured and unsecured debts under certain stated amounts. Our office can assist in evaluating the client’s unique financial situation and advise as to the client's eligibility and ways to use the Chapter 13 process in order to obtain the most beneficial results from this process.
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