Chapter 13 Bankruptcy Myths

Many misconceptions surround Chapter 13 bankruptcy. Bankruptcy law is complex and confusing. You don’t want to make a mistake that could cost you big time – like paying more than you have to. Or paying too much attention to myths that aren’t true. We have listed five common myths regarding filing for Chapter 13 bankruptcy.

Most People Don’t Qualify for Chapter 13 Bankruptcy

Misleading! These debt limits are not necessary to be eligible for Chapter 13. They are too high and can only be used in certain situations. The debt limits are subject to change every three years. They will be revised in April 2022. The limit for unsecured debts such as credit cards, tax debts, or child support payments is currently $419,275. It is $1,257.850 for secured debts such as mortgages and car loans.

I Will Lose My Home If I File for Chapter 13 Bankruptcy

False! Chapter 13 can be used to save your house with a 3-to 5-year grace period to pay off the mortgage. Your house will be safe as long as your mortgage payments are current. A “strip off” procedure is used to eliminate the second mortgage in Chapter 13.

My Chapter 13 Plan Must Be Approved By My Creditors

No! As long as all the Bankruptcy Code requirements are met, creditors cannot prevent a plan from being approved by the Bankruptcy Court. If the plan fails to adequately address its claims, secured creditors can object to it. However, the Bankruptcy Judge will make the final decision based on the Bankruptcy Code requirements.


My House Can’t Be Sold for More Than Five Years

Wrong! It is possible to sell your house at any moment. You will need to take additional steps, but as long as the proceeds are distributed according to your Chapter 13 plan, it is rare that a sale can be prevented.

A Bankruptcy Trustee Is Going to Oversee My Life

Misleading! While a trustee will be assigned to your file, they are not expected to interfere with your daily life. After your plan has been approved and you have paid your bills on time, it’s unlikely that you will need to contact your bankruptcy trustee again. There is no chance of scrutiny in cases that involve a change in circumstances.

This post was written by Trey Wright, one of the best bankruptcy lawyers in Tallahassee! Trey is one of the founding partners of, specializing in bankruptcy law, estate planning, and business litigation.

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