BANKRUPTCY LAWYER

A person meeting the eligibility requirements may file under Chapter 13 if their business is not incorporated. A debtor who owns their own business is normally permitted to continue to operate the business during the Chapter 13 case.

There are four methods of dealing with a secured creditor under Chapter 13: (1) they may accept the proposed plan, (2) they may be allowed to retain their lien and be paid the full amount of their secured claim under the plan, (3) their collateral may be surrendered to them, or (4) they may be dealt with outside the plan. If the debtor is in default to a secured creditor, the default must be cured (made current) within a reasonable time. Also, interest must be paid on secured debts.

Under Chapter 13, the court possesses powers to aid the debtor that private debt consolidation services do not have. For example, the court has the power to prohibit creditors from attaching or foreclosing on the debtor’s property, the power to force unsecured creditors to accept a Chapter 13 plan that does not pay their claims in full, and the power to discharge a debtor from unpaid portions of debts. Private debt consolidation services have none of these powers.

Chapter 13 is usually preferable for the debtor who – (1) wishes to repay all or most of their unsecured debts and has the income with which to do so within a reasonable time, (2) has valuable nonexempt property or exempt property pledged as security for debts, either of which they would lose if they filed under Chapter 7, (3) is not eligible for a discharge under Chapter 7, (4) has one or more substantial debts that are not dischargeable under Chapter 7, or (5) has sufficient assets with which to repay their debts, but needs temporary relief from their creditors in order to do so.