Chapter 13 Bankruptcy: Frequently Asked Questions

Chapter 13 bankruptcy can potentially be very confusing and overwhelming. For most people, filing bankruptcy is a new experience that is hard to maneuver and understand. As with any unknown, it is both natural and wise that you have questions about the bankruptcy process. In this article, you will find answers to a few of the most frequently asked questions about Chapter 13 bankruptcy.

How is Chapter 13 different from Chapter7?

Chapter 13, often called the repayment plan, is a form of bankruptcy where the court restructures payments so that the debtor can more readily afford to pay their debts. Unlike in a Chapter 7, you will have to keep paying into your debts – you won’t get an immediate discharge. As a result, filing for a Chapter 13 requires that you have a steady income that will allow you to make regular payments. Another important difference between Chapter 13 and Chapter 7 is property –in a Chapter 7, you would have to give up any “nonexempt property” to the court, such as savings or a second car.

Do I still get an automatic stay?

Yes. Even though Chapter 13 does not lead to an immediate discharge, you still receive an automatic stay after you file. Soon after you file your case, your collectors and creditors will receive notice about your bankruptcy filing, and will be ordered to stop all collection activities. For the duration of the stay, creditors and collectors will be unable to perform collection activities or otherwise contact you without going through the court.

Do I get a discharge in Chapter 13?

At the end of your repayment plan, the court will issue a discharge of eligible debts, as long as you have paid into the plan as required. Your discharge means that the liabilities for any remaining debts that were covered by the bankruptcy are no longer yours – they have been cancelled.

How long does a Chapter 13 repayment plan take?

The duration of your Chapter 13 repayment plan will change based on your case. Depending on your income level, you will be granted either a three-year or five-year repayment plan. If you stay on top of payments until the end of your repayment plan, your remaining eligible debts will be discharged.

What happens if I miss a payment?

Missing a payment during your repayment plan can have negative consequences. After you miss a payment, the trustee (the official presiding over your bankruptcy) can start an action for dismissal to stop your bankruptcy agreement. At this point, unless you prove that you can continue paying under the current plan or can get a new plan approved, the bankruptcy agreement can be dismissed by the court. In the unfortunate event your case is dismissed, creditors will be allowed to once again pursue you with collection procedures.

I’m stuck. What should I do?

If you choose to file a Chapter 13, at some point in time, you are likely to have questions that have not been answered here. If you get stuck and are unsure of what to do, always consider contacting a bankruptcy lawyer for help. You are not alone – a lawyer has the knowledge and experience to help answer your questions and can offer legal representation if you need it.