Chapter 13 bankruptcy is another common type of bankruptcy filing. It is sometimes called the Wage Earner’s Bankruptcy, and it is commonly used by individuals with regular income since under this filing a repayment plan is established.
A repayment plan is a proposal to repay debts on a certain timeline in order to prevent repossession or foreclosure. The repayment plan is subject to review by a Trustee. Once a plan is established, the debtor will make monthly payments directly to the Trustee over the course of 36 to 60 months. Once the clock has run out on the repayment plan, the debtor is relieved of their remaining debt for good. This does not mean that minimal payments can be made. Under Chapter 13 bankruptcy, all of the debtor’s disposable income must go towards debt reduction.
In order to file for Chapter 13 bankruptcy, you must be able to demonstrate that you have income and therefore the means to pay down your debts. Income can come from a salary, a pension, social security, unemployment, and a variety of other sources, but the source of the income must be disclosed. You also must be current on your tax filings in order to file for this type of bankruptcy.
We can help you to determine which type of filing is best for your given circumstances, and we can guide you through the filing process.