How Does a Chapter 13 Payment Plan Work?

chapter 13 payment planChapter 13 bankruptcy, known as the “Wage Earner Bankruptcy”, is designed for those individuals who are able to repay a portion of their debts over time. They can repay their debt in a Chapter 13 payment plan. Most individuals who seek protection under Chapter 13 of the U.S. Bankruptcy Code are those who:

  • Own property that would not be considered exempt under Chapter 7;
  • Have a past due balance on a mortgage or car loan and wish to repay those past due balances over time without fear of foreclosure or repossession;
  • Have debts such as student loans that would not be discharged under a Chapter 7 bankruptcy; or
  • Have Disposable Income (as it’s defined by the bankruptcy laws) sufficient to repay a portion of their debts over a three year period of time (this period is five years for people who do not qualify for Chapter 7).

Under Chapter 13 you have the opportunity to catch up on past due mortgages, car loans and rent payments. In addition, if you repay your debts through Chapter 13 you are given a predictable payment plan that your creditors are required to accept. The major difference between Chapter 13 and debt consolidation is that Chapter 13 gives you the protection of the U.S. Bankruptcy Code to protect yourself from continued interest, late fees, and credit harassment.

Contact a Bankruptcy Lawyer About Your Chapter 13 Payment Plan

Our experienced Oregon and Washington bankruptcy lawyers can explain and help you put together a proper Chapter 13 Plan to ensure that it is a successful one.