What is Chapter 13? A Chapter 13 is a wage earner proceeding. A plan is created to pay back your debts at a reduced rate over a period of time. The debtor pays a portion of his wages into the Court each pay period. This money is then used by the Court to pay the debts. The plan generally lasts from 3 to 5 years. At the end of the plan, the debtor does not have to pay the remaining balance of the debts.
When should i file a chapter 13? The four most frequent reasons for filing a Chapter 13 include:
- The debtor’s house is being foreclosed. Chapter 13 is the only proceeding that will stop a foreclosure and allow you to retain your home;
- The debtor’s debts cannot be wiped out (discharged) in a Chapter 7;
- The debtor owns too much property which cannot be kept (exempted) in a Chapter 7; or
- The debtor wants to pay the debts but needs more time and the Court’s assistance.