Should you file chapter 13 bankruptcy? The decision is very important as it impacts various aspects of your life now and in the future. For informational purposes, we are providing information. This is not legal advice and you should speak with a licensed attorney for legal guidance.
Unlike a Chapter 7 bankruptcy, a Chapter 13 bankruptcy is for people who have income or assets above a certain level. Also called a wage earner’s plan, chapter 13 bankruptcy allows individuals with regular income to create a plan to repay all or part of their debts.
In a Chapter 13 bankruptcy the debtor, you, proposes a plan to repay your creditors in installments over the period of three to five years. Depending on your income, the court determines the length of the plan. During this repayment period, creditors are forbidden from continuing collection efforts.
Remember that the repayment plan is based on court mandated budgets that follow IRS guidelines, and the penalties for failure to pay are severe.