Chapter 13 bankruptcy was originally called the “wage earner” bankruptcy, and is often still referred to as the “wage earner” bankruptcy. This Chapter of bankruptcy is intended for individuals with a regular income who want to pay their debts or a portion of them. A Chapter 13 repayment plan might allow a person to pay creditors over an extended period of time under bankruptcy court supervision and protection. Under the Chapter 13 Bankruptcy, the petitioner could have a three to five year period to adjust their debts while creditors are prohibited from starting or continuing collection efforts.

For this reason, Chapter 13 Bankruptcy cases are often used to catch up on mortgage payments to avoid foreclosure and remain in the family home. The Chapter 13 Bankruptcy can also be used to restructure a car payment and prevent a vehicle repossession. This type of bankruptcy is also a useful tool for individuals who owe real estate taxes or some other types of taxes, such as income tax or employment tax that may be paid off over the next five years.

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