Bankruptcy
Chapter 13
This chapter of the Bankruptcy Code provides for adjustment of debts of an individual with regular income. Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years.
What Is Chapter 13 Bankruptcy?
Chapter 13 differs from a Chapter 7 in that you make payments to a trustee for 3 to 5 years. The amount you pay depends on your income and what you are trying to pay through your plan.
You don’t have to pay unsecured debts in a Chapter 13, but in some cases you may have to pay something to the unsecured creditors. Unsecured creditors are those such as credit cards, medical bills, utilities, pay day loans.
Chapter 13, like Chapter 7, does not discharge or eliminate taxes, student loans, child support or criminal fines. It has a broader discharge than what Chapter 7 gives to you.
There is more flexibility in Chapter 13 to deal with car payments, arrearage on mortgages and other types of debts. It provides a structure which may be helpful in getting certain debts paid rather than in Chapter 7.
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