Chapter 13 bankruptcy works by allowing debtors to make a debt restructuring plan to pay back their creditors. This option is usually taken by those with a steady enough income to afford to undertake a repayment plan. Chapter 13 bankruptcy works by giving debtors who can feasibly afford to repay their creditors an opportunity to renegotiate the terms of their debt before having their assets seized. To file Chapter 13 bankruptcy, you will need to petition the bankruptcy court serving the area in which you live. The best first step is to contact an accredited bankruptcy lawyer to figure out your case.How Does Chapter 13 Bankruptcy Work?
How to File Bankruptcy Chapter 13
What Is Chapter 13 Bankruptcy FAQs
Chapter 13 Bankruptcy is a type of debt reorganization that allows individuals to repay their debts over a period of 3-5 years, supervised by a bankruptcy court.
After filing for Chapter 13 Bankruptcy, the debtor must submit a repayment plan proposing how they will pay back creditors over time and the bankruptcy court will approve or deny it. Once approved, payments are made directly to a trustee who distributes them to creditors according to the terms of the plan.
Yes. Chapter 13 Bankruptcy filers must have a steady income to support their repayment plan and meet certain debt limits in order to qualify.
Yes, some types of debts are not eligible for discharge under Chapter 13 Bankruptcy, such as student loan debt, most taxes, and certain punitive damages.
Upon filing for Chapter 13 Bankruptcy, you will receive an automatic stay from creditors which prevents them from pursuing collection actions against you while the case is active. Additionally, your unsecured creditors may agree to accept a reduced amount of repayment, and you may be able to retain assets such as your home or car.
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.
To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.