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Chapter 13 Bankruptcy

What is Chapter 13 bankruptcy?


In a Chapter 13 case, an individual with regular income repays all or a portion of his or her debts over a three-to-five-year period through a monthly payment plan approved by the Bankruptcy Court. For that reason, a Chapter 13 case is sometimes referred to as an “adjustment plan” or “wage-earner plan.” In a Chapter 13 case, the Trustee does not take possession of non-exempt assets, but supervises the case and administers the payments to creditors under the Chapter 13 plan.

A Chapter 13 debtor who completes all payments provided for in the approved plan receives a discharge. Under certain circumstances, a discharge also may be granted to Chapter 13 debtors who do not complete the payments under their plan due to circumstances beyond their control. A Chapter 13 discharge may allow the discharge of certain debts that cannot be discharged in Chapter 7, which may make Chapter 13 more attractive to you, depending upon your unique circumstances. If the payment plan is not successful it may be possible to convert the case and obtain a discharge under Chapter 7.


How much does Chapter 13 bankruptcy cost?


The fee paid to the United States Bankruptcy Court for filing a Chapter 7 bankruptcy case is presently $306, but is subject to change, so be sure to ask your attorney what the current filing fees are. If you are represented by an attorney you will have to pay an additional fee for legal services. The fees charged by attorneys are not uniform and vary from place to place and from attorney to attorney.


How does a debt management plan program differ from Chapter 13 bankruptcy


Our Debt Management Plans (DMP) are voluntary for both you and your creditors. Therefore, all creditors may not waive interest. However, when you have repaid your debts our credit recovery program will help you regain your credit.

In contrast, when you file for Chapter 13 bankruptcy it becomes public record. The court will administer the plan and all interest will be stopped. You may also have difficulty obtaining credit in the future.