What We Can Do

Chapter 13 Bankruptcy

Also called a wage earner's plan, Chapter 13 enables those who have high enough incomes to pay off their debts in lieu of liquidation. Typically individuals who file for Chapter 13 are inundated with demands from creditors for payment, not for lack of raw income. This form of bankruptcy allows debtors to maintain the authority of their physical possessions - like their homes - as long as they pay the mortgage under a reiterated plan. Chapter 13 provides anywhere between three and five years to resolve repayment issues while applying disposable income to debt reduction. Even though keeping your home is a significant relief, those who file Chapter 13 will spend years being monitored by a court-appointed trustee who will collect payment and ensure that it gets properly distributed.

It's worth noting that Chapter 13 restructures your payment plans - so there might be debts that may be included in your program. Depending on the terms, after you satisfy specific requirements, unsecured junior liens like a secondary mortgage linked to your house may be stripped. When a lien is stripped, it will be categorized as a nonpriority unsecured debt and eliminated once you receive your discharge.

Some of the debts eliminated by Chapter 13 bankruptcy overlap with discharges typically associated with Chapter 7 bankruptcy. However, some debts are dischargeable on this form of bankruptcy and not Chapter 7: debts from damaged property, specific tax obligations, and certain penalties enacted by the government.