Chapter 13 bankruptcy is used to reorganize a person's financial affairs while under the protection of the Bankruptcy Court. Chapter 13 Plan
Under Chapter 13, an individual is given the opportunity to propose a Chapter 13 plan to reorganize their debt including taxes, car loans, IRS debt, and credit cards.
The Bankruptcy Code classifies debt into three classes:
- Secured Claims - such as mortgages and car loans
- Priority Unsecured Claims - such as certain IRS debt and child support
- General Unsecured Claims - such as credit cards
A typical Chapter 13 plan has a term of three to five years. The payments under a chapter 13 plan are normally made from the Debtor's regular wages or other source of income. The Chapter 13 plan payments are made to the Chapter 13 trustee who disburses the payments to creditors in accordance with the Chapter 13 plan.
Chapter 13 Plan Confirmation
The Bankruptcy Code also provides the requirements to be met for a Chapter 13 plan to be confirmed by the Bankruptcy Court.
