Chapter 13 Bankruptcy Explained | Step by Step | Summary and Q&A

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June 11, 2020
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Consumer Warrior
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Chapter 13 Bankruptcy Explained | Step by Step

TL;DR

Chapter 13 bankruptcy is a longer process than Chapter 7, lasting 3-5 years, and is filed when individuals do not qualify for Chapter 7, need to catch up on mortgage or car payments, or want to retain assets while still benefiting from bankruptcy.

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Key Insights

  • 🪡 Chapter 13 bankruptcy is filed when individuals don't qualify for Chapter 7, need to catch up on payments, or want to retain assets.
  • 🈷️ It requires monthly payments to creditors over 3-5 years and provides protection from foreclosure and repossession.
  • 🧑‍🏭 Factors such as secured debts, priority debts, disposable income, nonexempt assets, and administrative expenses determine the monthly payment.

Transcript

  • Hey everybody, this is John Skiba with the Arizona Consumer Law Group and in this video I'm going to talk to you about what a chapter 13 bankruptcy is, why you would file it and how it differs from a chapter seven. But if this is your first time on my YouTube channel, go ahead and click the subscribe button and click on the little bell so that yo... Read More

Questions & Answers

Q: What is the difference between Chapter 13 and Chapter 7 bankruptcy?

Chapter 13 is a longer process lasting 3-5 years, during which individuals make monthly payments to creditors. Chapter 7 eliminates unsecured debt and is a shorter process of around 4-5 months.

Q: How does Chapter 13 bankruptcy help individuals who are behind on mortgage or car payments?

Chapter 13 can stop foreclosure or repossession, giving individuals 3-5 years to catch up on their payments while protecting their assets.

Q: What are priority debts in Chapter 13 bankruptcy?

Priority debts are debts that must be paid and usually include taxes, child support, and alimony. These debts affect the amount individuals need to pay during the bankruptcy plan.

Q: What happens if an individual's disposable income is higher or lower than the calculated plan payment?

If the disposable income is higher, individuals may need to pay the excess amount to their creditors. If it's lower, they may need to adjust their budget to make the plan feasible.

Summary & Key Takeaways

  • Chapter 13 bankruptcy is an alternative to Chapter 7 for individuals who do not qualify, are behind on mortgage or car payments, or want to retain assets.

  • It requires making monthly payments to creditors over 3-5 years and can help save homes from foreclosure or cars from repossession.

  • Some factors influencing the monthly payment include secured debts, priority debts, disposable income, nonexempt assets, and administrative expenses.

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