What Is Chapter 13 Bankruptcy?
In a Chapter 13 bankruptcy, the debtor pays off some or all of his or her debt through a payment plan over the course of 3 to 5 years.
How Does Chapter 13 Bankruptcy Work?
Chapter 13 bankruptcy offers a unique debt solution not available in Chapter 7 bankruptcy. Yes, you’ll pay into a repayment plan, but your money will go toward the debts that matter most – like your mortgage, car loan, support obligations, and taxes. Your remaining debts, such as credit card balances, medical bills, and utility bills are usually paid a small percent of what is owed and are discharged, i.e. eliminated, upon successful completion of the plan.
What If My Home Faces Foreclosure?
If you are facing foreclosure, in most situations, filing a Chapter 13 bankruptcy will immediately stop the foreclosure process, at least temporarily. In addition, any past due payments to your lender are usually be included in the Chapter 13 plan and spread out over the term of your scheduled payments plan.