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Chapter 13 Bankruptcy
A type of bankruptcy that enables debtors to propose a 3-to-5 year payment plan that provides for the repayment of existing debts over time using future income. As such, this type of bankruptcy is only for individuals with regular income and relatively low debt levels.
Under Chapter 13 bankruptcy, certain â??priority debts,â?? including child support, alimony, employee wages, and delinquent taxes, must be repaid in full. The repayment plan must also include oneâ??s regular payments on their principal dwelling and any delinquent amounts, while payments on other secured debts can be spread across the life of the payment plan. Only whatever disposable income is left over after making payments toward these aforementioned obligations will be put toward unsecured debts like medical payments and credit card balances.
Failure to repay your debt obligations in full results in your bankruptcy being classified as non-discharged, which means information about it will remain on your credit reports for 10 years. If you fulfill your obligations, your debt will be discharged, and bankruptcy information will only remain on your credit reports for 7 years.