Chapter 13 Bankruptcy Definition

What is Chapter 13 Bankruptcy?

Chapter 13 is a bankruptcy proceeding where the court may modify the rights of secured lenders and allow the defaulting borrower to keep some or all of the collateralized assets and pay back the debt within a set period of time according to a "best effort" standard.

REtipster does not provide legal advice. The information in this article can be impacted by many unique variables. Always consult with a qualified legal professional before taking action.

Chapter 13 Bankruptcy Explained

A Chapter 13 bankruptcy proceeding involves the adjustment of debts of an individual with regular income.1Ruth, George E. Commercial Lending. 5th ed., Washington, D.C., American Bankers Association, 2004, pp. 306.

Under Chapter 13, the defaulting borrower will propose a repayment plan to make installments to creditors over three to five years.2“Chapter 13 – Bankruptcy Basics.” United States Courts, United States Courts, www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-13-bankruptcy-basics. Accessed 19 May 2020.

Chapter 13 bankruptcy is referred to as a reorganization bankruptcy. The debtor’s assets are not sold when they file for bankruptcy protection, and they may be able to keep their property if they can successfully complete a court-mandated repayment plan.3Fried, Carla. “Bankruptcy: Chapter 7 vs. Chapter 13.” Experian, Experian, 28 Mar. 2018, www.experian.com/blogs/ask-experian/bankruptcy-chapter-7-vs-chapter-13/. Accessed 19 May 2020.

References

  1. ^ Ruth, George E. Commercial Lending. 5th ed., Washington, D.C., American Bankers Association, 2004, pp. 306.
  2. ^ “Chapter 13 – Bankruptcy Basics.” United States Courts, United States Courts, www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-13-bankruptcy-basics. Accessed 19 May 2020.
  3. ^ Fried, Carla. “Bankruptcy: Chapter 7 vs. Chapter 13.” Experian, Experian, 28 Mar. 2018, www.experian.com/blogs/ask-experian/bankruptcy-chapter-7-vs-chapter-13/. Accessed 19 May 2020.

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