Unlike in Chapter 7 bankruptcy, the trustee in a Chapter 13 case doesn’t sell your nonexempt property to pay your creditors. In exchange for keeping all of your property, you propose a plan to pay back a portion of your debts through your bankruptcy. Chapter 13 is one method under the Bankruptcy Code to obtain relief from your creditors, while at the same time providing a fair means to pay them back as much as you can. The Trustee in Chapter 13 Bankruptcy Unlike the gathering and sale of property that is involved in Chapter 7 liquidation bankruptcy, debtors in Chapter 13 reorganization bankruptcy keep possession of their property during the course of the bankruptcy. A trustee's main duties in these cases deal primarily with handling payments.
What Does Bankruptcy Do? What is the Bankruptcy Process? How do I Prepare for a Bankruptcy Filing? What is My Property? What Happens to My Property in Chapter 7? What Happens to My Property in Chapter 13? Chapter 7 What is Chapter 7? What is Disposable Income? Chapter 13 What is Chapter 13 Bankruptcy? What is Chapter 13 Bankruptcy?
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 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. The Chapter 7 process is also known as a straight or liquidation bankruptcy. Chapter 11 is a form of bankruptcy which involves a reorganization of a debtor's business affairs, debts, and assets. Named after the U. Corporations require time for debt restructuring , and it gives the debtor a fresh start, subject to the debtor's fulfillment of his obligations under the plan of reorganization.
As the most complex of all bankruptcy cases and generally the most expensive, a company would consider Chapter 11 reorganization only after careful analysis and exploration of all other alternatives. Chapter 13 bankruptcy enables individuals with a regular income to restructure their obligations to repay their debt over time.
In such a plan, the debtor does not seek to earn general forgiveness of their outstanding debts. Rather, the debtor offers up a repayment plan that employs fixed installment payments. Chapter 13 bankruptcy formerly was called a wage earner's plan because relief under it was only available to individuals who earned a regular wage.
Subsequent statute changes expanded it to include any individual, including the self-employed and those operating an unincorporated business. Both personal and corporate bankruptcy filings fell in to the lowest level in more than 10 years, since the Great Recession, according to a report from Supreme Court Chief Justice John Roberts. During the bankruptcy proceedings of Billy McFarland's Fyre Festival , the bankruptcy trustee asked the presiding judge to issue subpoenas to several talent agencies.
The Fyre Festival was to have been a stellar, star-studded, event at the Grand Exuma in the Bahamas. However, when ticket-holders arrived, they found a site still under construction. A bankruptcy trustee in a Chapter 7 case may be responsible for managing payments made by the debtor for a specific period.
The trustee will forward payments to the creditor for a specified period, usually three to five years. Debt Management. Your Money. Personal Finance. Your Practice. Popular Courses. Part Of. Bankruptcy Basics. Types of Bankruptcy. Personal Bankruptcy. Corporate Bankruptcy. Bankruptcy: Your Legal Rights. Bankrupty Terms C-I. Bankrupty Terms J-Z. What Is a Bankruptcy Trustee?
Key Takeaways A bankruptcy trustee is an administrator who is assigned to your case by the United States Trustee if you file for bankruptcy.
There are three main types of bankruptcy: Chapter 7, Chapter 11, and Chapter 13; the trustee's responsibilities vary depending on which type has been filed. With Chapter 7, the trustee oversees the liquidation of the assets and the paying back of the creditors. With Chapter 11 bankruptcy, a trustee helps reorganize a debtor's business obligations, debts, and assets; this usually applies to a corporation.