How Chapter 13 bankruptcy works

If you are facing a foreclosure of your home or have had your wages garnished by a creditor or by the IRS, Chapter 13 bankruptcy can be a great way to reorganize your financial affairs. Chapter 13 bankruptcy is type of reorganization bankruptcy, which means you repay some or all of your debts over time. Often, you pay back only the payments on debts that are secured by property that you want to keep. In many cases, you will not pay your unsecured debts, which means credit cards and other debts that are not secured by liens against your assets. Here is how Chapter 13 bankruptcy works. The process begins by filing a bankruptcy under Chapter 13 of the Bankruptcy Code. You list all of your assets, debts, income and expenses, propose a Chapter 13 plan that repays certain debts and eliminates others, and then complete your plan over a 3-5 year plan term. About 30-40 days after you file for bankruptcy relief, you and your bankruptcy atto ey will attend a meeting of creditors. The bankruptcy trustee will review your bankruptcy papers and Chapter 13 plan. Once your bankruptcy appears to be in order, the trustee will typically consent to confirmation (approval) of your Chapter 13 and your plan will be confirmed (approved). Once your Chapter 13 plan is completed, in 3-5 years depending upon the length of your play, you will get a discharge of your debts. What this means for you is that you can expect to receive a document in your mail providing that all of your debts that can be eliminated have been eliminated . A discharge means that your debts are eliminated. A discharge only eliminates debts that are dischargeable under bankruptcy law. The Chapter 13 discharge is similar to a Chapter 7 bankruptcy (credit card bankruptcy) discharge in that you can eliminate as much of your debt as the bankruptcy law will allow you to eliminate. But unlike Chapter 7, in which you obtain a discharge (elimination) of your debts in about 90 days, in a Chapter 13 you have to complete a 3-5 year repayment plan before obtaining a discharge.