Chapter 13 Bankruptcy

A Chapter 13 Bankruptcy is one in which you make a monthly payment to the trustee, for 36 to 60 months, to repay a portion of your debt to your creditors. You’re eligible for a Chapter 13 Bankruptcy discharge if you have a steady source of income, have not filed for a Chapter 7 Bankruptcy within the last four years, and have not filed for a Chapter 13 Bankruptcy within the last two years.


Chapter 13 Benefits

Repayment to unsecured creditors in a Chapter 13 can range from 0% to 100% depending upon the types of debt, your income, and the value of your non-exempt assets. This bankruptcy is commonly referred to as “reorganization” or “wage earner” plan. In a Chapter 13 Bankruptcy, you can generally keep all of your property.

One of the benefits to choosing Chapter 13 over Chapter 7 is that certain debts that cannot be discharged in Chapter 7 can be paid through the Chapter 13 plan. Some of these debts include back taxes, past-due child support or spousal support, student loans, loans obtained by fraud, past-due mortgage payments, and past-due car payments.

Here are some considerations when trying to asses if a Chapter 13 Bankruptcy is a good choice for you:

  • You want to keep your home, but you’re behind on your mortgage payments
  • You want to keep your car, but you’re behind on your payment
  • You make too much money, have too many non-exempt assets, or have too much non-dischargeable debt under Chapter 7
  • You owe recent taxes, or other taxes that a Chapter 7 bankruptcy would not get rid of, and you need more time to pay back the IRS
  • You have a cabin or second home that would most likely be liquidated and sold by the trustee in a Chapter 7
  • You don’t feel right about not paying anything back to your unsecured creditors
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