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Chapter 13 bankruptcy basics

On Behalf of | Apr 16, 2021 | Uncategorized

Sometimes, despite a borrower’s best efforts, they cannot repay the full amount of the debt they owe each month. They may be interested to know more about Chapter 13 bankruptcy and how an attorney may be able to help.


Chapter 13 bankruptcy allows individuals who have a regular income to make a plan to repay all or part of their debt over a period of time. The borrower can propose a payment plan to make installment payments to his or her creditors over three to five years. During the repayment period, creditors are not allowed to collect on the debt.

This type of program can be especially helpful for borrowers who have a home because it can help prevent them from losing the property to foreclosure. The borrower still has to make the mortgage payments that are due under the terms of the bankruptcy, however.

Chapter 13 bankruptcy can also extend debts over the time period set for repayment, which may lower the borrower’s monthly payments. The borrower makes payments to a Chapter 13 trustee who then distributes those payments to the creditors.

Filing process

To start the Chapter 13 bankruptcy process, the borrower can file a petition with the bankruptcy court. The borrower must file a schedule of his or her assets and liabilities, information about his or her current income and expenses and other financial information.

The borrower must also file a certificate of credit counseling and a copy of any debt repayment plan he or she has completed with the credit counseling organization.

An experienced bankruptcy attorney can help borrowers navigate this process and answer their questions.