Chapter 13 Bankruptcy is one of the reorganization bankruptcy types, also known as a repayment plan or a wage earner plan. 

It is one of the four types of reorganization bankruptcy:
Chapter 9 (Cities)
Chapter 11 (Corporations / Individuals)
Chapter 12 (Farmers and Fisherman)
Chapter 13 (Individuals with less than a certain amount of debt)

NC Bankruptcy Lawyer in Charlotte North Carolina for Chapter 7 / Chapter 13

Chapter 13 cases typically run from three to five years in length, and require payments to your creditors made through the Court.

One of the most surpising things people find out about Chapter 13 repayment plans is that many people GREATLY REDUCE what is paid to general unsecured creditors (no collateral).  

Many people think if they file a 13, that they will have to pay everything back in full.  While some people do have the ability to pay all of their debts in 13, many people reduce what they pay to pennies on the dollar, or a percentage of what is owed.  

In many cases, but depending on the circumstances, Chapter 13 might:

  • Stop Foreclosures and give you time to catch up mortgage payments
  • Stop Repossessions, reduce balances owed on some cars or lower car payments
  • Reduce credit card debt, loans and medical bills so you pay what you can afford
  • Protect property that creditors may take if they sue you

What is paid depends on a number of factors.  

Taxes and priority debts must be paid in full.

Secured debt claims are paid in full.  If you have a house, car or other secured debts, they have to be paid in full or sometimes you can reduce what is paid to the value of the property.  This depends on certain what the property is (residence, rental, vehicle, property) and possibly how long you have owned it.

Most of the flexibility in repayment is for unsecured debts, like credit cards, personal loans, and medical bills.  These debts have no collateral.  Unsecured debts can be reduced significantly, and in some cases to 0%, but it depends on each case. 

You have to pay the unsecured creditors at least as much as you can afford to pay, and if you have property that is not exempt, you may have to pay to keep it.

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DISCLAIMER: This message is intended as a general discussion of legal issues and not as a statement of fact, legal advice or a legal opinion. Personal opinions may also be expressed. No attorney-client relationship is created by this message. Do not act or rely upon law-related information in this communication without seeking the advice of an attorney licensed to practice in the relevant area.

The Law Office of Susanne M. Robicsek is
a Federally Designated Debt Relief Agency
under the Bankruptcy Code.
I file bankruptcy cases for people in financial need,
and have been doing so since 1989.

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