Chapter 13 Bankruptcy
Definition - What does Chapter 13 Bankruptcy mean?
Chapter 13 bankruptcy is a type of bankruptcy that allows an individual with regular income to repay all or part of their debts in a three to five year period while keeping the majority of their assets and property. The period of years within which a debtor must repay his or her debts can vary depending on current monthly income and the amount of the debt.
Chapter 13 bankruptcy is also called the wage earner's plan or reorganization bankruptcy.
Justipedia explains Chapter 13 Bankruptcy
Chapter 13 bankruptcy allows a debtor to pay back a portion or all of their debts over a three to five year period. One requirement to file Chapter 13 is a stable, reliable income and a manageable debt burden. If a debtor's income is too low or irregular or the debt burden is too high, a court might not allow the debtor to file Chapter 13. Their case may be converted to a Chapter 7 bankruptcy. In filing Chapter 13, debtors must propose a repayment plan to their creditors and expect to commit to a tight budget for a relatively long period of time. The repayment plan is approved by the Trustee. Payments are not made directly to the creditors. The money is paid to the Trustee who then distributes the proceeds to the creditors.
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