What Is A Chapter 13 Bankruptcy?

A Chapter 13 bankruptcy is when an individual proposes a payment plan to the Court in order to pay back debt. The payment plan typically last between 3 to 5 years during which the debtor is required to make payments in full and on time. At the end of the payment plan, any remaining balances will be discharged provided that the creditor did not default on any of the payments.

Individuals who earn to much to qualify for a Chapter 7 bankruptcy have to file under the Chapter 13 code. If you have fallen behind on mortgage payments, a Chapter 13 bankruptcy will enable you to catch up and may even help you save your home if you are facing foreclosure.