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What does it mean to file for Chapter 13 bankruptcy?

On Behalf of | Oct 28, 2014 | Chapter 13

Last week we discussed the benefits and limitations of filing for Chapter 7 bankruptcy. While Chapter 7 is the more common of the two main types of personal bankruptcy for Oregon residents, you may find Chapter 13 to be a better fit, depending on your own circumstances. Again, like Chapter 7, Chapter 13 has its own set of rules.

According to Fox Business, about 30 percent of all consumer bankruptcy filings in 2012 were Chapter 13. This type of bankruptcy has several benefits, including giving you the chance to stop the foreclosure process during bankruptcy proceedings and get caught up with mortgage payments. It can also give you a reasonable way to repay student loan debt, which typically is not eligible for a bankruptcy discharge.

At the beginning of the bankruptcy process, you should be given a means test that determines your income, financial circumstances and eligibility. If you have a surplus of money at the end of the month that’s enough to repay credit cards and other unsecured debt, you will most likely be directed to Chapter 13 bankruptcy. This will allow you to repay a portion or all of your debt under a manageable repayment plan, overseen by a bankruptcy trustee appointed by the court. Generally, Chapter 13 bankruptcy is completed in three to five years.

If you’re considering Chapter 13 bankruptcy, it may help to know that this option is attractive to many people because it allows them to show good faith by repaying as much debt as possible. The information provided here is general information and not to be taken as legal advice.


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The Law Office of Kim Covington is a debt relief agency, and I have helped families, individuals and small businesses, file for bankruptcy relief under the U.S. Bankruptcy Code, for over 22 years.