Chapter 13 Adjustment
What does "Chapter 13 Adjustment" mean in law?
Chapter 13 of the Bankruptcy Code permits individual debtors with regular income to retain their property while repaying creditors through a court-confirmed plan lasting three to five years, as governed by 11 U.S.C. sections 1321-1330. Unlike Chapter 7, Chapter 13 does not require liquidation of assets; instead, the debtor commits future disposable income to fund the repayment plan. The debtor must have unsecured debts below $465,275 and secured debts below $1,395,875 (amounts adjusted periodically). Upon successful completion of all plan payments, the debtor receives a discharge of remaining qualifying debts.
Definition
Chapter 13 of the Bankruptcy Code permits individual debtors with regular income to retain their property while repaying creditors through a court-confirmed plan lasting three to five years, as governed by 11 U.S.C. sections 1321-1330. Unlike Chapter 7, Chapter 13 does not require liquidation of assets; instead, the debtor commits future disposable income to fund the repayment plan. The debtor must have unsecured debts below $465,275 and secured debts below $1,395,875 (amounts adjusted periodically). Upon successful completion of all plan payments, the debtor receives a discharge of remaining qualifying debts.
Example
A homeowner facing foreclosure filed for Chapter 13 to cure mortgage arrears over a five-year repayment plan while keeping possession of the family home.