Chapter 13 bankruptcy is also referred to as a “wage earner” bankruptcy. One requirement to file a Chapter 13 bankruptcy or “wage earner” is that you must have some form of regular income. Some types of regular income are employment or self employment income, social security benefits, disability, unemployment, retirement, child support, AFDC or other consistent source of income. A Chapter 13 bankruptcy modifies or restructures your debt to make it more affordable and allow you to protect and keep your property. With a Chapter 13 case, all of your debt can be consolidated into one monthly payment. Are you at the point where you are borrowing from Peter, to pay Paul, to get to Mary next? With a Chapter 13 bankruptcy, you can stop worrying about who gets paid next. It is time to stop the stress of deciding who to pay next and consolidate your payments to a more affordable monthly payment.
Generally, a Chapter 13 case assists a debtor in stopping a repossession or foreclosure of property that they wish to keep, but due to hard times, have gotten behind on their payments. A Chapter 13 plan lasts 3 to 5 years. If the case was filed to stop a foreclosure because the mortgage was behind, then at the end of the case, the mortgage will be current and back on track with the contractual terms of the mortgage agreement. All other debts would be discharged and no longer owed, with the exception to any unpaid student loans.
Often times, a Chapter 13 case is filed to assist a person in maintaining their driver’s license or reinstating their driver’s license by paying court costs or fines or delinquent child support. Sometimes, a Chapter 13 case is filed to stop collection by the IRS, and “freeze” their debt, preventing them from continuing to access statutory penalties and interest. Some debts owed to the IRS are dischargeable and some are not. A Chapter 13 case can be filed to split up the claims of the IRS and provide a payment to that debt that cannot otherwise be discharged. A Chapter 13 case lasts from 3 to 5 years and at the end of the case, upon receiving a discharge, the debtor is debt free with the exception of any student loans that were not paid through the case.