Function

• The purpose of Chapter 13 bankruptcy is to allow people who are having debt problems to get control of the situation. With this plan, people who have a large amount of debt can work with their creditors to come up with a legitimate plan that will eliminate their debt over the long-term. This type of bankruptcy can provide relief from collection calls, and it also allows the debtor to keep his property instead of having it liquidated through bankruptcy.
  
  

Benefits

• The big benefit of this type of bankruptcy is that you get to keep your property, which is not always the case with Chapter 7 bankruptcy. If you are behind on your mortgage payments, you can actually work out an agreement to keep your house under this type of bankruptcy protection. Another benefit of this program is that you will not have to have any direct contact with the creditors while you are repaying them. Instead, you will pay a trustee, who will then distribute your payments for you.
  
  

Eligibility

• In order to file for Chapter 13 bankruptcy, you have to meet certain eligibility requirements. Not everyone will be able to qualify for this type of help. Since you are repaying your creditors over a certain amount of time, you have to have a high enough income to do so. If the court determines that your income is too low or is not regular enough, it may dismiss your case from the bankruptcy court. You also have to have less than $1,010,650 in secured debts or $336,900 in unsecured debt.
  
  

Term

• The term of the Chapter 13 bankruptcy process will be three or five years, depending on your situation. In order to determine which term you will receive, the court will look at your income and compare it to the state average. If your income is higher than the state average, you will have a five-year plan. If your income is lower than the state average, you will get a three-year repayment term.
  
  

Considerations

• This type of plan is designed to provide some protection from your creditors. If you are for some reason unable to make your payments because of some type of financial hardship, you can work with the bankruptcy court to get help. They may be willing to modify the terms of your bankruptcy judgment or they may even dismiss some of the debt that is outstanding. If there are any debts left over after successfully completing your plan, they could be dismissed as well.