Chapter 13 bankruptcy is a type of bankruptcy that is designed to help individuals with regular income reorganize their debts and make payments over a period of three to five years. Unlike Chapter 7 bankruptcy, which involves liquidating non-exempt assets to repay creditors, Chapter 13 bankruptcy allows debtors to keep their property while making payments to their creditors.
In Chapter 13 bankruptcy, debtors create a repayment plan to pay off all or a portion of their debts over a period of three to five years. The plan is based on the debtor’s income, expenses, and assets, and must be approved by the bankruptcy court. The debtor makes monthly payments to a bankruptcy trustee, who then distributes the funds to the creditors according to the terms of the repayment plan.
One of the benefits of Chapter 13 bankruptcy is that it allows debtors to catch up on missed mortgage or car payments over the life of the repayment plan. This can help debtors avoid foreclosure or repossession of their property.
It is important to note that not all debts can be discharged in Chapter 13 bankruptcy, and certain debts, such as taxes, child support, and student loans, must be included in the repayment plan. Additionally, debtors must have a regular income to be eligible for Chapter 13 bankruptcy.
If you are considering filing for Chapter 13 bankruptcy, it is recommended that you consult with an experienced bankruptcy attorney to review your specific financial situation and determine if Chapter 13 is the right option for you.
The Attorneys at Shanner and Associates can help you create a feasible repayment plan and guide you through the bankruptcy process.