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What is a Chapter 13 Bankruptcy?

A chapter 13 bankruptcy, also called a wage earner plan, is a type of bankruptcy for individuals or married couples who have a steady income sufficient to fund a 3 to 5 year payment plan.  The chapter 13 administered by the Standing Chapter 13 Trustee.  Once the bankruptcy case is filed, the Debtor, through their attorney, will file a proposed chapter 13 plan and start making payments under the plan.  Certain payments will be paid directly to creditors but most payments will be consolidated into a monthly payment paid to the Standing Chapter 13 Trustee, who in turn will distribute the payment to creditors as provided under the plan.  The plan must be approved by the Bankruptcy Court.  Once payments are completed under the plan, the Debtor will receive a discharge of any unsecured debts not fully paid under the plan.

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