Chapter 13

Chapter 13 explained

What is chapter 13 bankruptcy?

In a chapter 13 case you file a plan showing how you will pay off some of your past-due and current debts over a period of three to five years. The most important thing about a chapter 13 case is that it will allow you to keep valuable property, like your home or car, even if you are behind on payments or you have equity not covered by your exemptions. Your payments on these secured debts will generally be your regular monthly payments plus some extra amount if you need to get caught up because you are behind when you file.

Why do people file a chapter 13 bankruptcy?
Generally, people file chapter 13 if they have valuable property not covered by an exemption, like a home or car, but want to keep this property. If a debtor is behind on secured loan payments a chapter 13 bankruptcy can allow the debtor to make up these payments over time while keeping the home or car.

CHAPTER 13 – Allows you to enter into a plan with your creditors to repay your debts.

Your chapter 13 plan allows you to repay your creditors back for pennies-on-the-dollar. This means is that you can pay back anywhere between 0% and 100% to your creditors. The amount of your payment is based on your ability, such as your income, family size and monthly expenses.

Chapter 13 has some distinct advantages over chapter 7, it allows you to repay debts that are not dischargeable in a chapter 7 over an extended period of time. In addition, Chapter 13 can get you current on your mortgage payments so the mortgage company will not foreclose on your house. Chapter 13 may also help you keep your car by paying the car through your chapter 13 plan. In some circumstances Chapter 13 can also remove second mortgages on your house.