Chapter 13 Bankruptcy Basics

: Chris Lee Law Firm

  Filed under: Chapter 13

ch 13 home

A Chapter 13 bankruptcy is also called a “reorganization” bankruptcy. Chapter 13 bankruptcy is very different than Chapter 7 “liquidation” bankruptcy. In a Chapter 13 bankruptcy, you keep all of your assets and submit a plan to the bankruptcy court on how you intend to pay back your arrears. This type of bankruptcy is best when you have significant secured assets such as a home or cars you wish to keep.


The significant difference in Chapter 13 is that you allowed to pay back your late payments over a matter of time. The court-approved plan can last for three to five years, where you will make a single monthly payment to the court to be distributed to your creditors.

Chapter 7

Chapter 7 bankruptcy is best for those with little to no secured debt. In Chapter 7, all of your qualifying unsecured debt will be wiped away in as little as three to six months. Credit cards, medical debt, payday loans, back utility bills, old taxes, and other debt without collateral attached will be legally eliminated.

Non-Dischargeable Debt

No matter what type of bankruptcy you file, some debt will never be allowed to be eliminated.

  • Alimony
  • Child support
  • Current taxes
  • Most student loans
  • Fines and fees to government agencies

The Repayment Plan

When you make your proposed repayment plan to submit to the court, you have the opportunity to reorganize your debt and protect your assets from creditors, foreclosure, and lien holders. The typical payment plan to the trustee lasts for three years. Plans can last up to five years, but legally no more than five years are allowed.

After you have made your court-approved payments, any remaining qualifying debt will be discharged. You must continue to make your mortgage and vehicle payments if you wish to keep the collateral.

If you are facing foreclosure or would like more information on how to get financial relief, contact a Dallas bankruptcy attorney today.

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