Chapter 13 Bankruptcy is a partial to full repayment bankruptcy. Debtors typically enter into a 36 to 60 month Plan to repay all or part of their debts to the creditors.
Almost all people who file for Chapter 13 do not have to turn over any property except their payments according to the Plan.
Chapter 13 is a very powerful type of bankruptcy for Debtors because:
- it is totally voluntary. If it isn’t working for you then you can dismiss the case at any time.
- under certain circumstances you can eliminate (“strip”) off a second or third lien on your secured property, such as a home.
- you may be able to lower your interest rates on your car loans or other loans secured by personal property.
- you can get up to 5 years to pay back domestic support arrearages.
- you can get up to 5 years to pay back tax arrearages (often interest free).
- you can get up to 5 years to pay back property tax arrearages.
- although student loans are most often non-dischargeable, you can get up to 5 years of relief from having to pay them (although interest still accrues).
- the Chapter 13 discharge encompasses more than the Chapter 7 discharge.
The emphasis on Chapter 13 is not on recovery of your property but on your budget and your ability to make regular payments to a Trustee for disbursement to your creditors. One important condition in a Chapter 13 is that the creditors must fare at least as well as they would have had the Debtor filed a Chapter 7 liquidation case (but note, what the Creditors recover in a Chapter 13 will be over 3 to 5 years, not within months, like in a Chapter 7). There are debt limits on a person’s ability to be in Chapter 13.