Chapter 13 bankruptcy is a reorganization bankruptcy option for wager earners who are struggling with overwhelming debt to consider. It is one type of personal bankruptcy protection to consider and for that reason, consumers seeking a fresh financial start should be familiar with it.
Eligibility for Chapter 13 bankruptcy
Chapter 13 bankruptcy is a repayment bankruptcy option which requires the filing party to repay some of their debts according to the repayment plan worked out with the bankruptcy court. Because of that, the filing party will need a reliable source of income to pay the repayment plan.
Repayment plan and how much needs to be repaid
The repayment plan is worked out with the help the bankruptcy court and will need to be repaid usually within 3 to 5 years as decided on according to the plan. Priority debts, including taxes and child support, will need to be paid first. Other secured debts will need to repaid and then the bankruptcy court will evaluate if the filing party has any disposable income to pay unsecured debts.
Once the repayment plan is complete, the filing party will receive a debt discharge and any debts not included in the repayment plan will be discharged.
Chapter 13 bankruptcy can give filing parties struggling with debt more time to repay those debts and get back on track. It offers many protections and the possibility of debt relief which is why it is valuable to be aware of what Chapter 13 bankruptcy has to offer struggling consumers.