If your debts do not exceed an amount set forth under the U. S. Bankruptcy Code you may be eligible for a Chapter 13 Bankruptcy. Chapter 13 is available for debtors who have a regular source of income and who want to repay all or a part of their debts in installment payments over a period of time.
A payment plan must be approved by the court. The Plan gives detail on the debtor’s intention to repay all or a portion of the money owed to creditors. Chapter 13 payment plans generally range from three to five years. Once the payment plan is complete most debts are generally discharged. There are exceptions such as domestic support responsibilities, debts for criminal fines, most student loans and certain taxes to name a few. These exceptions are not discharged even after completing the Chapter 13 payment plan.
For debtors behind in their mortgage, Chapter 13 may be preferable because under an approved plan debtors may be able to keep their house. As previously stated, it is important to note that the payment plan must be approved by the court before it can take effect. Additionally, Chapter 13 may also be available to debtors that do not meet the Means Test under Chapter 7.