How Does Chapter 13 Bankruptcy Work?
Chapter 13 is a repayment plan that uses the debtor’s income to pay back debts, such as home mortgage, car loans, and other debts not dischargeable by Chapter 7. The debtor is protected from collection activities and still retains their assets and possessions throughout the case.
Debtors that apply for Chapter 13 repayment plan can take the debtor education course required any time after they receive their case number. The debtor education course certificate does not expire but would have to be retaken under some circumstances.
Some of Debthelper clients who start a Chapter 13 case and is unable to successfully complete their repayment plan have been converted to Chapter 7 after the fact. See your attorney if you are unable to repay your Chapter 13 repayment plan.
When is Chapter 13 the Best Choice?
Debtors may choose to file Chapter 13 if they have debts not dischargeable by Chapter 7 (such as student loans and taxes). Other appealing benefits of Chapter 13 are protection from creditors and the ability to keep your assets. Unlike Chapter 7, you will need to repay your debts according to the repayment plan but this will often not be 100% of what you owe creditors.
Chapter 13 does not stay on your credit report as long as a Chapter 7 filing does. Seven years is how long a Chapter 13 filing is on your report whereas a Chapter 7 stays on your credit report for 10 years.
Once you satisfy the terms of the repayment plan, your remaining debts eligible for discharge will be removed. To be discharged, the court will need to see you are current on your debts and have completed a debtor education course. Debtor education courses can be taken in person or over the phone at Debthelper.com.