Chapter 13 Bankruptcy


Chapter 13 bankruptcy is described as "Adjustment of Debts of an Individual with Regular Income" in the Bankruptcy Code. Although it is not referred to as a "reorganization" as is chapter 11, it is actually quite similar to chapter 11.

Chapter 13 Plan

Under chapter 13, an individual is given the opportunity to deal with both his secured and unsecured debts ("claims") by proposing a chapter 13 plan. In contrast to chapter 11, only the chapter 13 debtor is allowed to propose a plan.

The Bankruptcy Code sets forth various permissive and mandatory provisions for a chapter 13 plan. A typical chapter 13 plan has a term of three to five years.

The payments under a chapter 13 plan are normally made from the debtor's regular wages or other source of income.  The chapter 13 plan payments are made to the chapter 13 trustee who disburses the payments to creditors in accordance with the chapter 13 plan.

Chapter 13 Plan Confirmation

The Bankruptcy Code also provides the requirements to be met for a chapter 13 plan to be confirmed by the Bankruptcy Court.