A Chapter 13 bankruptcy is generally known as a wage-earner’s bankruptcy. It provides a way for an individual to repay its debts pursuant to the terms of a Chapter 13 plan. Only an individual or an individual and/or its spouse, except a stockbroker or commodity broker with regular income that owes, on the date of the filing of the petition, unsecured debts of less than $269,250 and secured debts of less than $807,750 may be a debtor under a Chapter 13.

A Chapter 13, if approved by the Court, allows a debtor to retain his or her assets, but the debtor must repay his or her debts pursuant to the terms of the plan.

In general, a Chapter 13 bankruptcy is most commonly used to avoid the repossession of an automobile, the foreclosure of a home or the repayment of tax obligations. The basic benefit of a Chapter 13 plan is that it allows you to pay money back at a rate that you can afford.

A budget is prepared showing all of your necessary living expenses, including your house payment and other principal obligations. The net sums from your monthly income after taxes and current living expenses are basically offered to creditors over a 3- to 5-year period.

In a Chapter 13 a discharge is entered upon the completion of all payments made under your confirmed plan.