A  Chapter 13  bankruptcy  allows a person to reorganize-restructure-reduce his or her debt. A  Chapter 13  proceeding pursuant to federal law allows a debtor to seek relief under Chapter 13 of the  Bankruptcy  Code which allows a person to repay all or a portion of his or her debt under the supervision and protection of the Court. Chapter 13 is for people with regular income. A person who is overwhelmed with debt, however, has a job and is capable of repaying some of his or her debt but could not possibly pay all of his or her debt. Chapter 13 can help a person with a job who is overwhelmed with debt. In many cases Chapter 13 can modify loans, lower interest rates, and favorably deal with mortgage arrears.

In a Chapter 13 bankruptcy, a debtor provides the Court with the plan for the repayment of all or a portion of his or her debts. The Court must grant approval for the plan to be successful. Once the Court approves the debtor’s Chapter 13 bankruptcy plan, most creditors will be barred from collecting money from the debtor.

A Chapter 13 Bankruptcy is completed in either three or five years, depending on the debtors circumstances. The debtor must make regular payments to the Chapter 13 bankruptcy trustee, who collects money paid by the debtor and pays creditors a fraction of the original debt. The completion of all of the payments, identified in the Court-ordered plan, releases the debtor from obligation for the rest of his or her dischargeable debts.

A Chapter 13 Bankruptcy allows you to reorganize-restructure-and reduce your debt. Chapter 13 leaves all of your debts behind you. On the contrary, had you tried to make monthly minimum payments on credit cards. You may never be able to get out of that hole. Despite the best intentions and best efforts debt often prevails at the expense of harmony in one’s life.

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