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Chapter 13 Bankruptcy is often called the ‘wage earner’ or ‘repayment’ plan, and is the type of bankruptcy in which you pay back some or all of your debts over a period of time – under the newly-effective law, usually three to five years. A Chapter 13 Trustee handles the payments and pays the creditors from the money you pay each month under the plan.
One reason for filing for Chapter 13 Bankruptcy protection can be to catch up on mortgage payments that have fallen behind (such as in a case of temporary unemployment), whereas paying back these arrearages cannot be done in a Chapter 7 proceeding. Another circumstance in which Chapter 13 is called for is where you have more income monthly than you need for your reasonable and necessary living expenses, and thus there is ‘excess’ income that can and should be paid to creditors that otherwise would be busy trying to collect - or even filing lawsuits and seeking wage garnishments for the full amounts owed.
At the end of the repayment plan, most or all of any remaining unsecured debts will then be discharged (‘wiped out’). You are allowed the same exemption protections for your property under Chapter 13 that you are allowed in Chapter 7 Bankruptcy.
Bankruptcy laws are very extensive and complex, and everyone’s case is different and unique. You can call our office for an appointment with Mr. Coy to discuss your situation and have your options explained to you before you decide what course of action is best for you.
Good general information regarding Chapter 7 and Chapter 13 Bankruptcy is also available from the Washington State Bar Association at:
Bankruptcy Information Pamphlet
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We are a debt relief agency. We help people file for bankruptcy under the Bankruptcy Code.
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