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The Bankruptcy Code offers several options for types of bankruptcy that may be filed, which are known as chapters. Chapter 13 bankruptcy is also known as wage-earner bankruptcy.

As this video explains, Chapter 13 is designed for people who have a steady income. You will set up a court-approved repayment plan. This provides for a portion of your future income to be paid to a trustee who, in turn, will make payments on your debts over a long period of time. The average repayment plan is three to five years. Compared to Chapter 7 bankruptcy, Chapter 13 offers the advantage of not being forced to liquidate or lose your assets to pay your creditors.

Before filing bankruptcy, you should consult with an attorney about what is best for your unique case.