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David C. Hoskins, Attorney at Law


In this series of articles, Mr. Hoskins describes chapter 13 bankruptcy and related issues, as well as how much a chapter 13 bankruptcy will cost in Colorado.

What is Chapter 13 Bankruptcy?

Posted by DaveHoskins on December 3, 2012

IMG_1972.pngWhat is Chapter 13 Bankruptcy?

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Chapter 13 bankruptcy is a plan to pay as much on your debt as you can afford to pay. If you have disposable income, you will be required to file a chapter 13 bankruptcy and pay some of your debt.  If you have filed a chapter 7 bankruptcy within the last 8 years, in order to get the protection of bankruptcy, you must file a chapter 13.

Chapter 13 Can Also be Useful, even Desirable, in Certain Circumstances.

  • If you are behind in mortgage or car payments, you can use Chapter 13 bankruptcy to get caught up.
  • If you have assets that you would lose to the trustee in Chapter 7, you can use Chapter 13 to keep those assets.
  • If your first mortgage balance is greater than the value of your home, you may be able to use Chapter 13 bankruptcy to get rid of a second mortgage.
  • If the value of your car is much less than the balance of the loan, you can use Chapter 13 to reduce your car payment.
  • If you were ordered to pay marital debt in a divorce, you can often use Chapter 13 to discharge that debt.

The amount that you pay in a Chapter 13 bankruptcy may be determined by the following factors.

  • The first factor is your income; your disposable income must be used to pay your creditors.
  • Second is the amount of assets that you would have lost to the trustee in Chapter 7; you must pay at least as much to your creditors as they would have received in a Chapter 7 bankruptcy.
  • Third is the amount of priority debt you owe. Priority debt includes taxes and domestic support obligations (family support). All priority debt must be paid in full through the plan.
  • Finally, if you are behind in payments to a secured creditor, and you want to keep the collateral (for example, a home or a car), you must pay the amount in arrears in full.

A successful Chapter 13 plan will pay off all tax debt, child and spousal support debt, and discharge all other unpaid, unsecured debt, except student loans and criminal penalties.



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The statements of law made here are general statements of law, effective at the time published and subject to change from time to time. These statements are not intended, nor may they be construed, to be applicable to any particular set of factual circumstances nor to any particular person. I recommend that all readers seek the assistance and advice of an experienced bankruptcy lawyer for guidance in their particular circumstances.

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