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Chapter 13 payment plan may help consumers to keep their home

Chapter 13 in the state of Washington and elsewhere is the bankruptcy program that provides for a monthly payment plan for an individual or married couple to catch up on their debts over a specified period. It is well-suited to consumer debtors who have sufficient income to fund a payment plan. Chapter 13 is also a valuable tool for those who want to keep their home despite having fallen behind in the payments.

There are certain qualifications that must be met to file a Chapter 13. It is only open to individuals and married couples, and not to business entities. However, a sole proprietor or partner in a business can file with respect to debts owed personally, which may include debts associated with the business. Prior recent bankruptcies in which a discharge was granted can bar someone from filing a Chapter 13. The details on this restriction and others mentioned can be obtained in a consultation with an experienced consumer bankruptcy attorney.

In addition, if a bankruptcy was dismissed without a discharge in the past 180 days in connection with certain prohibited activities, a filing is not allowed. As in a Chapter 7, credit counseling requirements must be met. The counseling course can be taken online and is not generally an obstacle to filing. There is a $336,900 unsecured debt ceiling to qualify for a Chapter 13. The secured debts must total less than  $1,010,650.

A major hurdle that must be met after filing the case is to get approval from the bankruptcy court for the Chapter 13 plan. The plan must show that all secured and priority claims are being addressed as required by law. If there is nonexempt property owned by the debtor, the plan payments must pay unsecured creditors up to the amount of the nonexempt assets, with payments spread over the course of the plan, which usually extends for a three to five-year period. The initial consultation with a consumer bankruptcy attorney in Washington state is usually provided as a service free of charge, and it is highly recommended that anyone contemplating filing bankruptcy participate in such a meeting.

Source: findlaw.com, "Who Can File for Chapter 13 Bankruptcy?", April 14, 2018

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