Chapter 13 Eligibility

Any individual who earns a constant wage may file for chapter 13 bankruptcy protection if the amount of his secured and unsecured debt is below a certain level. This numerical bar is periodically adjusted to fit the current economic situation.

Debtor Actions

After filing for bankruptcy under chapter 13 laws, the debtor must provide the court with a debt repayment plan for approval. After the plan is approved, the debtor must make regular payments to a case trustee, who then distributes the payments to the creditors.

Immediate Effects

Filing for chapter 13 bankruptcy immediately stops all collection proceedings against the debtor, including a foreclosure proceeding. The debtor, creditors and the trustee will then hold meetings to question the debtor and review the repayment plan.

Long-Term Effects

If the repayment plan is approved and the debtor completes the plan (usually three or five years later), he is cleared of all debts which he partially covered during the repayment period.

Case Conclusion

Although most of the debtor's obligations are removed after the conclusion of the case, certain debts must still be repaid, including long-term mortgages, taxes, child support and alimony.

Source:

U.S. Courts