What is Chapter 13 Bankruptcy?
A reorganization bankruptcy where debtors propose a 3-5 year repayment plan to pay off all or part of their debts while keeping their property.
Understanding Chapter 13 Bankruptcy
Chapter 13 allows debtors to catch up on mortgage or car payments, stop foreclosure, and keep non-exempt assets. The plan must pay unsecured creditors at least what they'd receive in Chapter 7. Debtors must have regular income and debt below certain limits.
Examples
- 1Five-year plan to cure mortgage arrears
- 2Cramming down car loan to vehicle value
- 3Completing plan and receiving discharge
Related Terms
Discharge (Bankruptcy)
The court order that eliminates a debtor's personal liability for certain debts, meaning the debtor is no longer legally required to pay them.
Bankruptcy
A legal proceeding that provides relief for individuals or businesses unable to pay their debts, allowing them to eliminate or restructure debt under court protection.
Chapter 7 Bankruptcy
A liquidation bankruptcy where non-exempt assets are sold to pay creditors, and remaining eligible debts are discharged, giving the debtor a fresh start.
Automatic Stay
An injunction that takes effect immediately upon filing bankruptcy, stopping most creditor collection actions including lawsuits, wage garnishment, and foreclosure.
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