What is a Chapter 13 bankruptcy?

A Chapter 13 bankruptcy is a type of debt relief available to individuals living in California who find themselves unable to pay off their debts. This type of bankruptcy allows debtors to reorganize and pay off their debt over a 3 to 5 year period. This type of plan is advantageous to creditors because it ensures that some of the money owed is repaid. When filing for Chapter 13, debtors must submit a repayment plan which details how the debt will be paid off over the course of the plan. This plan is then subject to approval by the bankruptcy court. In order for a repayment plan to be approved by the court, it must be feasible, meaning the debtor must have the financial means to make the payments each month. Once the repayment plan is approved, the debtor is required to make the payments as laid out in the plan. Any new debts the debtor takes on during the Chapter 13 period must be included in the repayment plan. At the end of the payment period, any remaining debts are discharged, giving the debtor a fresh start.

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What is a Chapter 13 bankruptcy?

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