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Chapter 13 - the "wage earner's" bankruptcy

For those who do not qualify for a Chapter 7 because of the income requirements, and some who would qualify for a Chapter 7 but have specific circumstances such as a past due mortgage, Chapter 13 is available. Some individuals may not be eligible for a Chapter 13 because of high value of assets or debt, and they must file under Chapter 11.  Under a Chapter 13, payments are made to the Trustee for a period of 3 to 5 years to repay some of the debt.  In return, assets that would have been forfeited in a Chapter 7 can be retained.  Additionally, some debts that are not dischargeable in a Chapter 7 may be dischargeable in a Chapter 13.  Unlike in Chapter 7, in a Chapter 13 a re-payment plan is developed and approved by the Court.  After all payments are made on the plan, the remaining debts are discharged.  However, like in a Chapter 7, some debts are not dischargeable, such as student loans and certain taxes. Chapter 13 can help a debtor keep a principal residence or other property that has a substantial arrearage due, for example.