Chapter 13 Bankruptcy
In a Chapter 13 bankruptcy, The debtor files a bankruptcy petition with a schedule of assets and liabilities and a statement of financial affairs, along with a Chapter 13 plan. The plan provides for repayment of the debtor’s debts over a 3-5 year period, from the future earnings of the debtor. A trustee is appointed to receive payments from the debtor and disburse them to creditors.
The debtor then attends a meeting of creditors. Creditors are not entitled to vote on the plan, but are allowed to file objections to the plan if they believe that the plan does not comply with Chapter 13 requirements.
In a Chapter 13 plan, the debtor remains in possession of all of his property, exempt and non-exempt. Upon completion of payments under the plan, the debtor typically receives a discharge, even if (s)he has paid less than 100% of the debt. Certain debts, however, must be paid in full to be discharged. Student loans and child support are two examples.
