Bankruptcy 101: What is a Chapter 13 Bankruptcy
Chapter 13 bankruptcy helps to deal with debt by making a plan to gradually pay off one's debts over a period of 3-5 years. Then the debtor avoids selling their property. The length of the repayment period depends on the debtor's monthly income compared to the average income in the state.
The Chapter 13 Bankruptcy Process
- Debtor files documents for a Chapter 13 bankruptcy.
- Judge reviews the plan.
- If the plan is approved, the person who filed for bankruptcy needs to give monthly payments to the assigned bankruptcy trustee. The trustee distributes the money to the creditors with valid claims.
- After all the payments are made, one's debts will be officially forgiven.
NOTE: The debtor still needs to pay taxes, child support, or alimony during the repayment period.
Eviction and Utility Service
If the debtor files a Chapter 13 bankruptcy before receiving a 5-day eviction notices for late rent, they might avoid eviction. However, the debtor-tenant will need to address and pay unpaid rent in the payment plan.
Utility bills will be eliminated. This is because utility bills are a type of unsecured debt, which is not tied to specific property or valuable item as collateral. Utility providers must reinstate services if the debtor-tenant promises future payment. The debtor-tenant usually has to pay a deposit within approximately 20 days.
The above article provides information about legal issues but is not the same as legal advice. Legal advice is when a lawyer applies the law to your specific situation. The information in this article does not replace the advice or representation of a licensed attorney. Law Center for Better Housing cannot guarantee the accuracy or completeness of the information in this article and is not responsible for any consequences that may result from using it. You should consult with a licensed attorney to ensure the information in this article is appropriate for your specific situation. Using the information in this article does not create a relationship between Law Center for Better Housing and you as your attorney.