The Road Out of Debt: Bankruptcy and Other Solutions to Your Financial Problems

Chapter 18. Two Trips through Chapter 13 Bankruptcy

It is never too late to be what you might have been.

—George Eliot

In this chapter, we present the stories of individual debtors who owe consumer debts and file for bankruptcy under Chapter 13 of the Bankruptcy Code. Even though your situation is not identical to these stories, these stories are meant to bring to life what you would encounter if you filed for bankruptcy under Chapter 13. We have also included bumps in the road to demonstrate alternate scenarios that some debtors encounter in bankruptcy cases.

All of the bankruptcy forms mentioned in this chapter are available at www.uscourts.gov. (See Appendix A or www.wiley.com/go/roadoutofdebt for more information.)

CHAPTER 13 Basics

Chapter 13 of the Bankruptcy Code, Debt Adjustments for Individuals with Regular Income, differs from Chapter 7 in a number of ways. Unlike a debtor in a Chapter 7 case, a Chapter 13 debtor files a plan under which he or she proposes to pay all or a percentage of his or her debts over a period of three to five years depending on his or her income. People in default on their mortgages or who have nonexempt assets and need to pay their debts over time are the primary debtors in Chapter 13 bankruptcy cases.

Advantages and Disadvantages

Chapter 13 has many advantages. However, you must also carefully consider some disadvantages before commencing a Chapter 13 case. You should additionally evaluate the differences between the types of bankruptcy relief available ...