Struggling with debt can be overwhelming. Chapter 13 bankruptcy is one option that is available to provide relief from the stress associated with overwhelming debt. Chapter 13 bankruptcy is considered a 'reorganization bankruptcy' that allows the filing party to reorganize his or her debt to repay it according to a more manageable repayment plan. The debts will be repaid over a period of time, typically three to five years depending on certain circumstances, rather than selling property to repay debts, which is commonly associated with a Chapter 7 bankruptcy.
Because Chapter 13 bankruptcy provides for the repayment of debts according to a schedule determined in the repayment plan, the filing party must have a regular and reliable income that is able to repay the debts in order to apply for Chapter 13 bankruptcy. In addition, certain debt limits are in place, and are important to be familiar with, when filing for Chapter 13 bankruptcy. As part of the process, the filing party must attend credit counseling and pay a fee to apply.