Chapter 13

Chapter 13 bankruptcy, also known as a wage earner's plan or reorganization bankruptcy, is a legal process that allows individuals to restructure their debts and pay them off over a period of three to five years: 

• Eligibility

To qualify, you must have regular income, have filed all required tax returns for tax periods ending within four years of your bankruptcy filing, and meet other requirements. 

• Process

You file a petition with a bankruptcy court, submit a repayment plan, attend a meeting of creditors, and have your plan approved by the court. 

• Repayment plan

You make monthly payments to a court-appointed trustee, who distributes the funds to your creditors. 

• Benefits

Chapter 13 can help you catch up on mortgage payments and avoid foreclosure, and co-signers may not be held responsible. 

• Impact on credit

Chapter 13 bankruptcy stays on your credit report for up to seven years, which can negatively impact your credit score and creditworthiness.