What is chapter 13 bankruptcy?

A Chapter 13 plan permits individuals who have a steady source of income to pay part or all of their debts under protection of the bankruptcy court. If you file Chapter 13, you file a petition and a plan with the bankruptcy court. The bankruptcy law requires that the payments you make through the plan to unsecured creditors have a value of at least what the creditors would have received if you had chosen to file a Chapter 7 case.  In a chapter 13 case, you record a plan demonstrating how you will pay off certain of your past-due and present debts over a period of three to five years. The most significant thing about a chapter 13 case is that it will permit you to hang on to valuable property, like your home or car, even though you are behind on payments or you have equity not covered by your exemptions. Your payments on these secured debts will usually be your normal monthly payments plus some additional amount if you need to get caught up because you are overdue when you file.

Go Back To FAQ

Fill out the form below for a free bankruptcy case evaluation right now.