Chapter 13

When you're bankrupt.

Ish.

Chapter 13 is a regroup/recover plan for individuals who kissed The Door of Deadbeatism. Chapter 13 (yes, unlucky number 13) is the set of filings and legal processes that a deadbeat files when they can't pay back the bills they promised to pay.

It's basically an individual going through the court to put all their debts into one basket, hand the basket to the trustee, and make payments to the trustee (who then doles money out to creditors). The goal is to pay everything off, at least partially, in 3-5 years. The debts are categorized by priority (cost of the bankruptcy itself), taxes, secured debts (debts that property can be taken for if not paid) and unsecured debts (no property tied to it as collateral).

The 13 offers protection from harassing collection agencies, and protects cosigners as well. One of the attractions of this chapter is the opportunity to bring a mortgage current and to keep the house from foreclosure.

To qualify (as of 2018), the individual must meet income requirements and debt requirements: unsecured debt less than $394,725 and secured debt less than $1,184,200. This plan is acknowledging that you’re in over your head, but not necessarily trying to discharge all the debt at once.