Chapter 13 bankruptcy is a powerful tool for repaying an agreed upon amount of your debt under a plan that fits your budget.
Here's what you need to know about Chapter 13 bankruptcy:
- Chapter 13 bankruptcy is specifically designed for "wage-earners" who have enough disposable income to repay their debts.
- Chapter 13 bankruptcy repayment plans must last three to five years.
- Chapter 13 bankruptcy debtors are required to pay the bankruptcy trustee and/or their secured creditors in a timely manner. Debtors must make sure that they pay the agreed upon amount in full. Partial payments will not keep your plan current. Failure to pay the agreed upon amounts during Chapter 13 bankruptcy could result in a dismissal of the case.
- Chapter 13 bankruptcy debtors must report any significant changes to their ongoing income. If the debtor's income increases during the plan timeframe, the debtor may be required to pay more to their creditors.
- If a Chapter 13 bankruptcy debtor loses their job or faces a significant salary reduction, they may be able to change their plan or have it converted to a Chapter 7 bankruptcy and receive a bankruptcy discharge.