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What is Chapter 13 Bankruptcy?
What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy, also known as the wage earners plan, allows individuals and spouses to file a repayment plan with bankruptcy courts so that they can pay their debts to creditors over a designated period of time. The designated period of time is usually between three to five years. The repayment amount varies by individual, but will usually depend upon the filers income, amount and types of debt owed, and the property that the filer owns. When you file for Chapter 13 bankruptcy, you will have to prove to the court that you currently generate enough income to maintain your repayment obligations. If your debts are considered to be too high, the court may not allow you to file for Chapter 13 bankruptcy.
After you enter into a repayment plan, you will usually have to make your first payment to your trustee 30 days after filing bankruptcy. Your designated bankruptcy trustee will then disperse the payment amongst your creditors for you. You can arrange for your repayment to be taken directly out of your paycheck or schedule other payment options. If you cannot maintain your repayment obligations for some reason, such as job loss, the bankruptcy trustee may amend your repayment plan.
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