Chapter 13 bankruptcy is often called a “wage earner's plan” because you will be required to make payments over a three to five year period before receiving your discharge. Chapter 13 bankruptcy is quite different from Chapter 7 bankruptcy in that Chapter 13 uses your income to pay some or all of your debt to creditors back over time.
A Chapter 13 bankruptcy is typically used in the following situations:
- To repay past due amounts on a home mortgage. If you are behind on your house payments or facing foreclosure, a Chapter 13 will allow you to pay back your past due amounts over an extended period of time
- If you have filed a Chapter 7 in the last eight years and cannot file another Chapter 7
- Owe taxes that are not able to be discharged in a Chapter 7
- If you own a significant amount of property or earn a substantial amount of money that you wish to keep
An experienced bankruptcy lawyer will be able to tell you if you qualify for Chapter 13 bankruptcy as well as how this type of bankruptcy can assist you in freeing yourself from debt.