Chapter 13 Is for Individuals
Video Transcribed: Do I qualify for a Chapter 13 bankruptcy in the state of Oklahoma? I’m Edward Kelley, Oklahoma Bankruptcy Attorney for the Wirth Law Office, and I’m going to try to answer that question.
So Oklahoma Chapter 13, first, who is it for? This is for an individual. A business generally is not going to be able to do a Chapter 13, pretty much always. A business can do a Chapter 7, which essentially means a trustee can help you get rid of your assets and deal with your debts, although you don’t get a discharge as a business, and you can do a Chapter 11, which I’ve talked about in another video, where you can reorganize.
Chapter 13 is the individual equivalent of a Chapter 11. So you as a person are going to come up with a sort of reorganization plan. So Chapter 13 means that either you made too much money to be able to do a Oklahoma Chapter 7 and/or you are behind and about to lose your house and/or vehicle because of a lack of payment.
And you want to stop that and force the creditors to let you keep that stuff. There’s pretty extraordinary powers in a Chapter 13. And if you saw my video in Oklahoma Chapter 11, this is much the same. There are some upper debt limits in a Chapter 13, but currently we’re talking about in the millions with the CARES Act has up some of those limits for the time being. And also the idea here is can you see a way to daylight?
So for example, if you’re $10,000 behind on your mortgage, you’re going to have to propose a plan where you pay the regular mortgage payment, probably through the trustee, plus a percentage of what you owe back spread out over up to 60 months or 5 years of a plan.
And you’re going to have to have income to do that. If you submit a plan where you don’t have the income to pay for that, it’s not going to be confirmed. And basically your case will end up being wasted.
So the short on a 13, you’ve got to have the means to make it work. Chapter 13 is based on what you owe, not… I’m sorry, is based on what you can pay, got that ass backward again, not on what you owe. So that your payment comes down to at least what you have left over after your regular expenses. And that’s something you have to hash out. That’s what your attorney does in a 13. They do a lot more work in that case than they do in a 7.
But if you can come up with a way, I’m going to have $600 a month coming in. I’m going to pay $100 dollars on my regular mortgage. I’m going to pay $50 a month on this arrearage, past due payments. And I’m going to do that for three to five years. And if that pays off all the debt you owe back on the house, any other debts that you’ve thrown in there are going to be discharged.
So it’s basically pay what you can for five years and everything left over gets discharged. And if you’re trying to keep collateral like a house or car, you need to pay them off in full within that five years. So are you a person? And do you have a realistic plan to get yourself back into daylight? So as always, you can reach me, again, Edward Kelley, Bankruptcy Attorney for Wirth Law at our website makelaweasy.com