What is a Chapter 13 Bankruptcy?

 

A Chapter 13 Bankruptcy is a bankruptcy that gives a debtor the ability to stop collection proceedings and propose a repayment plan to cure defaults on certain debts. The typical debt cured by a Chapter 13 is a mortgage in foreclosure or in default. Immediately upon filing the petition for a Chapter 13 bankruptcy, foreclosure or collection proceedings will be stopped by the Automatic Stay imposed by the law.   The debtor must submit a plan to pay the arrears on the mortgage over a period of 36 to 60 months. The payments are made monthly to the Chapter 13 Trustee, who is appointed to administer the debtor’s case. The Trustee sends the plan payments to the debtor’s creditors.

 

A Chapter 13 bankruptcy is also know as a “wage earner’s “ bankruptcy because a debtor in a Chapter 13 must have regular income but the source must not necessarily come from employment.

 

Please contact our office at 215 – 735 – 3377 or Demetrius@djpesq.com for more information regarding filing a Chapter 13 bankruptcy.