Chapter 13 Bankruptcy

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is a reorganization procedure in which a payment plan of 36 to 60 months is established. Chapter 13 bankruptcy allows you to prevent foreclosure or repossession if you are behind on payments and need to catch up. There are more types of debt dischargeable in Chapter 13 than in Chapter 7.  Chapter 13 is also appropriate if you don’t pass the means test or owe certain non-dischargeable debts such as recent taxes, or if you wish to strip a unsecured 2nd or 3rd lien on a property or cramdown a vehicle and interest rate.

For Chapter 13 relief, you must earn wages or another source of regular income and you must agree to pay part of your income to your creditors through a repayment plan. The court must approve your repayment plan and your budget. After you complete the plan, you will receive your discharge.