If you are struggling with debt, you may be considering filing for bankruptcy. Chapter 13 bankruptcy is one of the most common types of bankruptcy filed in the United States, and it can help you get a handle on your debt.
What is Chapter 13 bankruptcy?
Chapter 13 bankruptcy is a type of bankruptcy that allows you to reorganize your debt and repay it over time. Under Chapter 13, you get to create a repayment plan that details how you will repay your creditors. This repayment plan lasts for three or five years, and at the end of the plan, any eligible debt remaining is discharged.
Chapter 13 bankruptcy is often called a “wage earner’s plan” because it is typically used by people who have a regular income. If you do not have a regular income, you may still be able to file for Chapter 13, but you will need to show that you have enough income to repay your debt.
Examples of Chapter 13 bankruptcy
There are two common examples of Chapter 13 bankruptcy. The first is when you file for bankruptcy to stop a foreclosure on your home. When you file for Chapter 13, the court will enter an automatic stay. This order stops creditors from trying to collect on your debt, including foreclosing on your home. The second common example is when you are behind on your car payments. If you are at risk of having your car repossessed, you can file for Chapter 13 to catch up on your payments and keep your car.
Some people choose to file for Chapter 13 bankruptcy because it allows them to keep their property, like their home or car. Others choose Chapter 13 because it gives them a chance to catch up on their payments and get out of debt over time.