Chapter 13 bankruptcy is a reorganization-type bankruptcy for individuals with income. Chapter 13 combines the fresh start of chapter 7 with powerful tools to deal with secured loans, such as mortgages. Chapter 13 debtors normally keep all of their property, but pay some portion of their income to fund a plan. Chapter 13 debtors propose a chapter 13 plan to pay some or all of their debts over a period of up to five years. The bankruptcy code contains very particular requirements for what the debtor may propose in his or her plan, which must be confirmed by the bankruptcy court. After completion of the confirmed chapter 13 repayment plan, the debtor may receive a bankruptcy discharge that ends personal liability on many of their debts, giving them a fresh start financially.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy allows individuals and spouses to reorganize their debts via a chapter 13 plan. In addition to providing a fresh start from unsecured debts like credit cards, medical bills, and common civil judgments, chapter 13 also permits debtors to cure defaults on mortgages other secured loans.
We discuss Chapter 13 Bankruptcy in more detail on the following pages:
Filing Chapter 13 Bankruptcy -
Basic Information About Chapter 13
Credit Cards and Chapter 13 Bankruptcy
Many people have credit card debt, and many people file chapter 13 bankruptcy. But what about when there is credit card debt in chapter 13 bankruptcy? Chapter 13 plans are repayment plans, a fact that causes a good bit of uncertainty for people considering bankruptcy as a way to get out from burdensome credit card payments. This post explains the basics of how credit cards are treated in chapter 13, and explains why many chapter 13 plans provide no payment at all to credit card lenders.
Modifying Secured Loans in Chapter 13
A secured loan is any loan where the lender has an interest in collateral they could potentially take to pay the debt, including mortgages, deeds of trust, liens, and car loans. For bankruptcy debtors with secured debt, they can choose to file chapter 7 or chapter 13. Chapter 13 may offer options to adjust the terms on which the secured loan is repaid. Chapter 7 debtors who keep secured property generally pay the secured loan on the same terms as before bankruptcy. In both chapters, turning the property over to the creditor is also an option. This post discusses how and in what circumstances chapter 13 can alter secured loans.