What Is A Chapter 13 Bankruptcy?
Chapter 13 is a reorganization case, in which the debtor makes a monthly payment to a bankruptcy trustee over a period of three to five years, at which time the debtor receives a discharge of debt. A Chapter 13 case works best for debtors who would lose something with a Chapter 7 straight bankruptcy, since the debtor in the Chapter 13 case gets to retain all of his or her property.
Chapter 13 is where a person can repay all or part of his debts. Monthly payments are made to the Bankruptcy Trustee, who disperses the moneys collected to the debtor’s creditors according to the plan submitted by the debtor. The debtor must propose a payment plan based upon his excess monthly income, and payments must continue regularly for between 36 and 60 months. When the plan has been completed, any remaining debts are then discharged.
A Chapter 13 bankruptcy is also called a wage earner’s plan. It enables individuals with regular income to develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years. Chapter 13 permits individuals to keep their property by repaying creditors out of their future income. It is not available to corporations or partnerships. After completion of payments under the plan, Chapter 13 debtors receive a discharge of most debts.
