Chapter 13
Chapter 13 bankruptcy is known as wage earners bankruptcy and allows you to adjust your debts in accordance with a payment plan that last 3 to 5 years. The Chapter 13 plan requires the filer to repay all or part of their debts over 3 years if their monthly income is less than the state median income and over 5 years if you earn more per month than the state median income.
A significant advantage of a Chapter 13 bankruptcy is that it allows you to stop foreclosure on your home and make up any delinquent mortgage payments over a period of 3 to 5 years. It may also allow you to keep your property and can protect co-debtors who might also be liable for your debts. A Chapter 13 bankruptcy plan can lower your payments on secured debts and may allow you to write off all or portions of unsecured debts. The plan may also allow you to consolidate your debt resulting in one monthly payment to the trustee rather than dealing with multiple creditors. However, like Chapter 7, there are limitations on who can file for Chapter 13 bankruptcy relief.
Qualifying for Chapter 13: