Chapter 13 bankruptcy is typically referred to as reorganization bankruptcy. You will submit a plan to the court outlining how you plan to pay back your creditors over a period of time, usually from three to five years.
Chapter 13 bankruptcy is best for people that have secured creditors such as home mortgages or vehicles they want to keep. This type of bankruptcy is different than a Chapter 7 liquidation bankruptcy as you will not turn over any property to the court-appointed trustee to be sold to distribute to your creditors. If it was determined that you make more than your state’s median, you might also be redirected to file a Chapter 13 bankruptcy instead of Chapter 7.
It is common practice to have the monthly payment deducted from your wages to pay directly to the court-appointed trustee, who will then pay your creditors.
When you have finished making your payments according to the plan, you will receive a discharge of any remaining debt. If you wish to continue to use your home and your car, you will have to keep making those payments. Your unsecured debt like credit cards, payday loans, and medical bills will be eliminated.
There are several laws in place when figuring out your reorganization plan. It is best to use a qualified bankruptcy attorney to make sure you are getting all the benefits you are entitled to. If you wait too long, you may face foreclosure or repossession actions that have gone too far in the process for bankruptcy to help you.
For more information on Chapter 13 or any other part of bankruptcy, contact a Plano bankruptcy attorney.