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Chapter 13 bankruptcy, is known as "restructuring bankruptcy". The goal of someone who is filing for Chapter 13 bankruptcy is to have the opportunity to pay back their debts in a restructured plan In better terms. This usually means, severely reduced if not ,eliminated, interest rates. Unlike Chapter 7 bankruptcy, after 13 is not the liquidation of assets. Instead, chapter 13 allows a person to pay back their debt over time.
Who is eligible for Chapter 13 bankruptcy?
Chapter 13 bankruptcy is ideal for someone who has a regular, steady income and the ability to pay back their debt in a restructured manner. When you are filed for Chapter 13 bankruptcy, you are given a period of five years to pay back all debts in full.
How does Chapter 13 bankruptcy work?
When paying back your debt, your attorney is to safeguard your interest. However, the entire process is carried out through the supervision of the court system. The courts will be the one to approve the appropriate restructuring plan, based on the individual. Once the plan is reached and enacted you have 30-45 days to start paying your debts.
Unlike Chapter 7 bankruptcy, there is usually not a trustee who is responsible for paying the appropriate parties. However, if you so choose, you can work with a trustee who will ensure all debts are paid to the appropriate places.
A benefit Chapter 13 bankruptcy, is the full discharge option. This means if you have completed your payment plan, you can be discharged from the program. An option that is not available for Chapter 7 bankruptcy.
As with any form of bankruptcy, it is recommended that you see an attorney. From there, they will determine the best course of action and help guide you on the appropriate course to filing Chapter 13 bankruptcy.