Chapter 13 is a payment plan bankruptcy. Instead of having all the bills eliminated shortly after filing, in Chapter 13 payments are made to a court appointed trustee instead. Most debts that can’t be eliminated in Chapter 7 can be taken care of in a Chapter 13.

Chapter 13 of the U.S. Bankruptcy Code provides a debtor with an opportunity to pay off its debts through a court approved payment plan. The Chapter 13 procedure allows a debtor to repay some or all of its debts over a period of three to five years. Typically, the Chapter 13 debtor possesses the ability to repay some or all of their debt but requires time to do so. The benefit received from filing a Chapter 13 bankruptcy petition is that a debtor can keep all of his property, including those valuable assets, which are not exempt.

A common scenario in which a debtor will utilize the Chapter 13 option is when the debtor is behind on its mortgage payments. Chapter 13 bankruptcy will stop a foreclosure proceeding and give the debtor the right to pay back the past due payments over a period of up to sixty (60) months. As part of the payment plan, a debtor is required to pay back a percentage (or all) of the unsecured debt.

Upon the completion of the plan, the debtor will receive a discharge of debts and will be able to keep their property.

If you are having financial hardship and are considering filling for bankruptcy, please call our office at (916) 564-9588 for a free confidential bankruptcy consultation.

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