What is a Chapter 13 bankruptcy?

A Chapter 13 bankruptcy is a type of bankruptcy available to individuals in Hawaii. It allows individuals to reorganize their debts and repay them over a period of time. The filing of a Chapter 13 bankruptcy starts a court-appointed repayment plan that is supervised by a court-appointed trustee and lasts three to five years. During this time period, the debtor pays back debt out of their income. The payment plan is designed to adjust the debtor’s budget to be able to make reasonable payments to creditors. During the repayment period, creditors are prohibited from taking any action against the debtor. This includes collection calls, repossessions, lawsuits, and garnishments. Any foreclosure proceedings are also stopped and the debtor is allowed to keep their property. At the end of the repayment period, any remaining debt not paid by the debtor is discharged. This means the debtor is no longer responsible for paying back the remaining debt. Overall, a Chapter 13 bankruptcy gives a debtor the opportunity to get back on their feet financially. It gives debtors the time and flexibility to repay their debt so that they can eventually be free from it.

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