1. What You Should Know About Chapter 13Chapter 13 bankruptcy is designed for wage earners. If you do not have income you will not be able to file Chapter 13 bankruptcy.
  2. Chapter 13 bankruptcy allows the debtor to partially repay their unsecured creditors.  One of the misconceptions about Chapter 13 bankruptcy is that debtors must repay all of their debts.  The amount of money a debtor will repay is determined by their ability to repay their creditors.  Therefore a creditor could end up repaying only half of their unsecured debt while the rest is discharged after their Chapter 13 bankruptcy case has run its course.
  3. During Chapter 13 bankruptcy, the debtor is required to repay their over a course of 3 to 5 years. As mentioned in the previous point, at the end of the repayment term, the balance of the debtor’s unsecured debt will be discharged by the bankruptcy court.
  4. The debtor is allowed to present a repayment plan for their Chapter 13 bankruptcy; but the bankruptcy trustee has the power to either approve the repayment plan or deny it.  Also, creditors can challenge the plan; but they must adequately prove their claims of why the plan should not be approved.
  5. The debtor may have the right to change their Chapter 13 bankruptcy plan if their circumstances warrant the change. For example, if a debtor in Chapter 13 bankruptcy suddenly loses their job, they may be able to reduce their monthly payments to their creditors or even convert their Chapter 13 bankruptcy to a Chapter 7 bankruptcy.  If the debtor does in fact convert to a Chapter 7 bankruptcy, their remaining unsecured debts will be discharged.