Which chapter of bankruptcy is used by people with regular income who want to pay debts?

Which chapter of bankruptcy is used by people with regular income who want to pay debts?

• A. Chapter 7
• B. Chapter 11
• C. Chapter 9
• D. Chapter 13

Answer: (D)

Chapter 13 is a wage-earner repayment plan. It’s designed for individuals who have steady income and want to repay all or part of their debts over time instead of liquidating assets. Under this option, you propose a plan to repay creditors over about three to five years (based on what you can reasonably afford). Keeping your property, such as a home or car, is usually possible if you stay current with the plan payments. While the plan runs, most creditors are paused by an automatic stay, giving you breathing room. If you complete the repayment plan, remaining unsecured debts are typically discharged. This contrasts with Chapter 7, which involves liquidation of nonexempt assets for those who can’t afford to repay, Chapter 11, which is a reorganization used mainly by businesses or individuals with large debts, and Chapter 9, which is for municipalities. So for someone with regular income who wants to pay debts, Chapter 13 is the fitting path.

Chapter 13 is a wage-earner repayment plan. It’s designed for individuals who have steady income and want to repay all or part of their debts over time instead of liquidating assets. Under this option, you propose a plan to repay creditors over about three to five years (based on what you can reasonably afford). Keeping your property, such as a home or car, is usually possible if you stay current with the plan payments. While the plan runs, most creditors are paused by an automatic stay, giving you breathing room. If you complete the repayment plan, remaining unsecured debts are typically discharged. This contrasts with Chapter 7, which involves liquidation of nonexempt assets for those who can’t afford to repay, Chapter 11, which is a reorganization used mainly by businesses or individuals with large debts, and Chapter 9, which is for municipalities. So for someone with regular income who wants to pay debts, Chapter 13 is the fitting path.