“It gives to the honest but
unfortunate debtor…a new
opportunity in life and a clear
field for the future effort,
unhampered by the pressure
and discouragement of
—The U.S. Supreme Court
in explaining the purpose of bankruptcy
Chapter 13 is designed for individuals with regular income who would like to pay all or part of their debts in installments over a period of time. You are only eligible for Chapter 13 if your debts do not exceed certain dollar amounts set forth in the U.S. Bankruptcy Code.
Under Chapter 13, you must file with the court a plan to repay your creditors all or part of the money that you owe, using your future earnings. The period allowed by the court to repay your debts may be three years or five years, depending upon your income and other factors. The court must approve your plan before it can take effect.
After completing the payments under your plan, your debts are generally discharged except for: domestic support obligations, most student loans, certain taxes, most criminal fines and restitution obligations, certain debts which are not properly listed in your bankruptcy papers, certain debts for acts that cause death or personal injury, and certain long term secured obligations.