# Chapter 13 Bankruptcy Question: Is This Right? **URL:** \ **Category:** Factual Questions\ **Created:** [August 1, 2003, 2:56am UTC](https://boards.straightdope.com/t/chapter-13-bankruptcy-question-is-this-right/192279 "2003-08-01T02:56:54Z")\ **Posts on this page:** 9\ **Page:** 1
**Author:** ![Tuckerfan](https://avatars.discourse-cdn.com/v4/letter/t/eada6e/32.png) [@Tuckerfan](https://boards.straightdope.com/u/Tuckerfan)\ **Post date:** [August 1, 2003, 2:56am UTC](https://boards.straightdope.com/t/chapter-13-bankruptcy-question-is-this-right/192279/1 "2003-08-01T02:56:54Z")
A coworker and I were talking at work today and he was telling me that he called a bankruptcy attorney, he explained his situation to the attorney, and the attorney said, “In cases like yours, I recommend filing for a Chapter 13.” When my coworker explained that if he lost his house and cars, he wouldn’t have the money to replace them, the attorney said, “Oh, don’t worry about that, since you’re current, you’ll get to keep all those things.” He then asked the attorney about what kind of repayment plan he’d half to agree to the attorney replied, “There **isn’t** one.” Being dubious, he thanked the attorney, and said he be in touch. He then called four other bankruptcy lawyers and got the same answer. His question, and mine is how can this be? He still owes on his house and both his cars, but from what the lawyers told him, he’d get to keep them, and not have to pay anything on them. That doesn’t make any sense. ---
**Author:** ![cheezit](https://avatars.discourse-cdn.com/v4/letter/c/c57346/32.png) [@cheezit](https://boards.straightdope.com/u/cheezit)\ **Post date:** [August 1, 2003, 3:09am UTC](https://boards.straightdope.com/t/chapter-13-bankruptcy-question-is-this-right/192279/2 "2003-08-01T03:09:59Z")
I’m not a lawyer, but I think that they can’t take your transportation or your house. You do, however have to continue paying for them. There is more than one type of bankruptcy. Chapter 13, which apparently discharges all debts. Chapter 7 is where the person filing bankruptcy makes payment arrangements with the court. From a person standpoint, I have declared bankruptcy (over 20 years ago) and I also went through a credit counceling service. If your co-worker isn’t too terribly far into debt, I would recommend the consumer credit counceling service. It doesn’t mess your credit rating up near as bad. ---
**Author:** ![Violet](https://avatars.discourse-cdn.com/v4/letter/v/ebca7d/32.png) [@Violet](https://boards.straightdope.com/u/Violet)\ **Post date:** [August 1, 2003, 3:30am UTC](https://boards.straightdope.com/t/chapter-13-bankruptcy-question-is-this-right/192279/3 "2003-08-01T03:30:52Z")
The facts indicate a chapter 7, and not a chapter 13. See [http://www.nolo.com/lawcenter/ency/index.cfm/catID/734BECB6-ADDE-4041-AEC595AF30EA15CE](http://www.nolo.com/lawcenter/ency/index.cfm/catID/734BECB6-ADDE-4041-AEC595AF30EA15CE) > [@](#): > > Chapter 7 bankruptcy lets you eliminate (discharge) most of your debts in exchange for giving up property that is not protected by “exemption” laws. Someone called a bankruptcy trustee sells your property and distributes the money to your creditors. Any remaining unpaid debt is wiped out. If you don’t have much property, you may get to keep what little you have. However, certain kinds of debts cannot be eliminated in Chapter 7 bankruptcy. > [@](#): > > Chapter 13 bankruptcy lets you rearrange your financial affairs, repay a portion of your debts and put yourself back on your financial feet. You repay your debts through a Chapter 13 plan. Under a typical plan, you make monthly payments to someone called a bankruptcy trustee, who is appointed by the bankruptcy court, for three to five years. The bankruptcy trustee distributes the money to your creditors. ---
**Author:** ![Jodi](https://avatars.discourse-cdn.com/v4/letter/j/7feea3/32.png) [@Jodi](https://boards.straightdope.com/u/Jodi)\ **Post date:** [August 1, 2003, 3:58am UTC](https://boards.straightdope.com/t/chapter-13-bankruptcy-question-is-this-right/192279/4 "2003-08-01T03:58:52Z")
Nnnnnnh. I’m not a bankruptcy lawyer, but I _am_ a lawyer, which is enough to keep me from talking out my ass on this. But AFAIK that’s not how it works, at least not under a 13, and usually not under a 7. ---
**Author:** ![Dogface](https://avatars.discourse-cdn.com/v4/letter/d/9d8465/32.png) [@Dogface](https://boards.straightdope.com/u/Dogface)\ **Post date:** [August 1, 2003, 4:33am UTC](https://boards.straightdope.com/t/chapter-13-bankruptcy-question-is-this-right/192279/5 "2003-08-01T04:33:33Z")
I underwent Chapter 13 years ago. Unsecured debts (like credit cards) go away (although I had none of those). Secured debts (like student loans) get a payment restructure. I was able to get a very nice rate mortgage recently, so it’s not fatal. ---
**Author:** ![Otto](https://avatars.discourse-cdn.com/v4/letter/o/bbe5ce/32.png) [@Otto](https://boards.straightdope.com/u/Otto)\ **Post date:** [August 1, 2003, 1:25pm UTC](https://boards.straightdope.com/t/chapter-13-bankruptcy-question-is-this-right/192279/6 "2003-08-01T13:25:03Z")
> [@](#): > > Unsecured debts (like credit cards) go away (although I had none of those). Secured debts (like student loans) get a payment restructure. Your terminology is wrong. Debts that can “go away” through bankruptcy are “dischargable” debts. Debts that can’t “go away” (like student loans) are “non-dischargable” debts. Secured debts are those which are on property (mortgages, liens, car loans) and unsecured debts are the others (credit cards, phone bills). > [@](#): > > I’m not a lawyer, but I think that they can’t take your transportation or your house. You do, however have to continue paying for them. Oh, you can lose your house and car in a bankruptcy. A debtor can exempt certain amounts of various types of property (home, car, personal) when the bankruptcy is filed. There are federal dollar limits and each state also has its own dollar limits (which is why OJ moved to Florida and bought a big house…Florida has an unlimited exemption for homestead). The debtor may choose either the federal or the state limit but may not mix and match. IANAL etc. ---
**Author:** ![E72521](https://avatars.discourse-cdn.com/v4/letter/e/dbc845/32.png) [@E72521](https://boards.straightdope.com/u/E72521)\ **Post date:** [August 1, 2003, 2:48pm UTC](https://boards.straightdope.com/t/chapter-13-bankruptcy-question-is-this-right/192279/7 "2003-08-01T14:48:15Z")
I suspect that the OP got 7 & 13 mixed up. If you’re current on your secured debts, why go 13? If you’re behind on secured debts like your mortgage or car loan, I would think you would lose both in 7. But WTF do I know? Not a lawyer but been there done that… ---
**Author:** ![smaft](https://avatars.discourse-cdn.com/v4/letter/s/c2a13f/32.png) [@smaft](https://boards.straightdope.com/u/smaft)\ **Post date:** [August 1, 2003, 6:59pm UTC](https://boards.straightdope.com/t/chapter-13-bankruptcy-question-is-this-right/192279/8 "2003-08-01T18:59:48Z")
> [@](#): > > \*Originally posted by E72521 \* > \*\*I suspect that the OP got 7 & 13 mixed up. If you’re current on your secured debts, why go 13? If you’re behind on secured debts like your mortgage or car loan, I would think you would lose both in 7. But WTF do I know? Not a lawyer but been there done that… \*\* IANAL either, but I think you’re right, 7 & 13 are mixed up. Anyway, you will lose your house/car in a Ch. 7 if there’s sufficient equity beyond **Otto** ’s exemptions. It’s possible, but uncommon. Regardless of chapter, though, you won’t lose secured property simply because you’re behind when you file. (Warning: overgeneralization ahead!) You will lose it if you don’t get the payments caught up, either by the time the bankruptcy ends or before the creditor gives up on you and takes it to the judge. ---
**Author:** ![Tuckerfan](https://avatars.discourse-cdn.com/v4/letter/t/eada6e/32.png) [@Tuckerfan](https://boards.straightdope.com/u/Tuckerfan)\ **Post date:** [August 2, 2003, 4:09am UTC](https://boards.straightdope.com/t/chapter-13-bankruptcy-question-is-this-right/192279/9 "2003-08-02T04:09:57Z")
> [@](#): > > \*Originally posted by E72521 \* > \*\*I suspect that the OP got 7 & 13 mixed up. If you’re current on your secured debts, why go 13? If you’re behind on secured debts like your mortgage or car loan, I would think you would lose both in 7. But WTF do I know? Not a lawyer but been there done that… \*\* I didn’t get it mixed up. That’s what my coworker said, and even _he_ seemed puzzled by it, which is why I’m asking, since neither one of us could figure it out.