Chapter 13 is like a bigger, better version of a Chapter 7. It lets you get rid of certain debts you couldn't resolve in a Chapter 7. It allows you to reduce your car payments, get caught up on your mortgage payments, or even get rid of a second mortgage. It's what we use when you can't qualify for a Chapter 7 or when a Chapter 7 won't get you back on track.

What is a Chapter 13?

A Chapter 13 is a bankruptcy proceeding designed to let you catch up on certain secured debts, like your home mortgage, and to reduce payments on others, like your car. Finally, it can help if you have tax liability or student loans that are dragging you down. In exchange for these benefits, you agree to make a monthly payment to the Chapter 13 Trustee, who sees to it that your creditors are taken care of.

Chapter 13 is also a mechanism that lets you repay some of your unsecured creditors. This means that you may wind up repaying some of your credit card debts or medical bills, and the percentage you repay will be determined by a calculation that accounts for your specific circumstances; your creditors cannot unilaterally demand more.

What Debts Are Eliminated?

Chapter 13 eliminates just about everything. Credit cards, pay day loans, personal loans, medical bills, old utility bills, and just about all of your other bills are discharged.

The only bills that typically make it through a chapter 13 are student loans, child support obligations and criminal fines.

Will I Lose All My Things?

No. Every state has exemptions and Delaware's are very generous. Among other things, individuals get to keep $25,000.00 in whatever property you chose. You also get to keep a vehicle with up to $15,000 in equity.

You get to exempt your home, as long as it has less than $125,000.00 in equity. This means that you get to keep it as long as you could not sell it for more than $125,000.00 than you owe. So, for example, if you owe $300,000.00 on your house, you get to exempt it as long as you can’t sell it for more than $425,000.00. Given the depressed home prices of late, my clients rarely have a problem retaining their homes. Plus you get to keep all your qualified retirement savings, tools necessary for employment worth up to $15,000.00, and certain household goods and personal effects. With exemptions like these, it is extremely rare for anyone to lose anything when they file in Delaware.

Will This Stop A Wage Garnishment, Sheriff's Sale, and/or Levy?

Absolutely. In most cases, these will stop as soon as you file.

Will My Bankruptcy Be Accepted?

Bankruptcy is not a privilege, but a right. If you qualify for bankruptcy relief, your case will go through without any issue. Think of it like taxes: If you qualify for the deduction, you can take it. No ifs, ands, or buts about it.

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