Chapter 13 Bankruptcy

Chapter 13 can be considered the “individual’s reorganization”. Chapter 13 requires a debtor to come up with a financial plan where he or she can keep property which they might otherwise lose, like their car or home that is mortgaged. The plan must be approved by the bankruptcy court, and is supervised by the bankruptcy trustee. Usually the plan allows for a debtor to pay off debts over a period between three to five years, and any payments made under the plan are usually paid to the bankruptcy trustee which then disburses the money to the creditors. Chapter 13 bankruptcies stay on the debtor’s credit report for seven years.

Chapter 13 is frequently chosen by those that need to deal with secured debts, and by those that have property that they wish to keep, although some choose chapter 13 simply because they want to repay some or all of their debts. Like Chapter 7, Chapter 13 is intended to provide a fresh financial start to those that need it.