Chapter 13 Bankruptcy: What It Is and How It Works
by admin · November 3, 2023
Chapter 13 bankruptcy is a type of bankruptcy that allows individuals with regular income to reorganize their debts and repay them over a period of three to five years. It is also known as wage earner’s bankruptcy.
Who Can File for Chapter 13 Bankruptcy?
To file for Chapter 13 bankruptcy, you must meet the following requirements:
- You must have a //www.lawhints.com/ regular income.
- You must have unsecured debt that totals less than $439,975.
- You must have secured debt that totals less than $1,365,425.
How Chapter 13 Bankruptcy Works
When you file for Chapter 13 bankruptcy, you will create a repayment plan with the help of a trustee. Your repayment plan will outline how much money you will pay each month and how long it will take you to repay your debts.
Your monthly payments will be based on your income and expenses. You will be required to pay all of your priority debts, such as child support and alimony, in full. You may be able to reduce or eliminate some of your unsecured debts, such as credit card debt.
Your repayment plan will be approved by a bankruptcy judge. Once your plan is approved, you will be required to make your monthly payments to the trustee. The trustee will then distribute your payments to your creditors.
Benefits of Chapter 13 Bankruptcy
Chapter 13 bankruptcy offers a number of benefits, including:
- It allows you to keep your property, such as your home and car.
- It stops foreclosure and repossession proceedings.
- It gives you time to get your finances back on track.
- It allows you to reduce or eliminate some of your debts.
Drawbacks of Chapter 13 Bankruptcy
Chapter 13 bankruptcy also has some drawbacks, including:
- It requires you to make monthly payments for three to five years.
- You may not be able to reduce or eliminate all of your debts.
- You may be required to sell some of your assets to repay your creditors.
If you are considering filing for Chapter 13 bankruptcy, it is important to speak with an experienced bankruptcy attorney. An attorney can help you understand your rights and options and decide whether Chapter 13 bankruptcy is the right choice for you.
