Issue link: https://mbozikis.ufcontent.com/i/1422521
207 VIII. ADJUSTMENT OF DEBTS OF AN INDIVIDUAL WITH REGULAR INCOME (CHAPTER 13) A. Background Chapter 13 provides for the adjustment of debts of an individual with regular income, and it allows a debtor to keep certain assets (as opposed to Chapter 7, which requires debtors to surrender most of their assets) and to repay out of his or her future income all or a portion of his or her debts over time, usually three to five years. Chapter 13 is sometimes referred to as a "wage earner's reorganization" and offers individuals several advantages over a Chapter 7 liquidation. For example, Chapter 13 debtors may be able to protect their homesteads because Chapter 13 allows them to cure home mortgage defaults until such time as the underlying residences are sold at foreclosure sales. Additionally, Chapter 13 enables debtors to reschedule their secured debts and extend them over the life of the Chapter 13 plan, which may reduce the monthly or periodic payment amounts. Finally, the discharge granted to a Chapter 13 debtor is somewhat broader than that granted to a debtor under Chapter 7. B. Chapter 13 Debtors An individual with regular income, or an individual with regular income and his or her spouse, may file for bankruptcy under Chapter 13 so long as such individual owes (i) noncontingent, nonliquidated, unsecured debts in the amount of $419,275 or less and (ii) noncontingent, nonliquidated, secured debts in the amount of $1,257,850 or less. 11 U.S.C. ยง 109(e). 115 In determining whether an individual has "regular income" under Chapter 13, courts should consider the stability and regularity of such income rather than its type or source. See, e.g., In re Pellegrino, 423 B.R. 586, 590 (B.A.P. 1st Cir. 2000). As described in greater detail above in Chapter IV.A.2.b., in Chapter 13, a means test is used to determine the length of the 115 Stockbrokers and commodity brokers are excluded from Chapter 13.