Chapter 13 Bankruptcy Explained

Chapter 13 bankruptcy is a partial debt repayment plan designed for working people who are financially struggling, according to both the United States Bankruptcy Court and the book "How to File for Chapter 7 Bankruptcy."

Time Frames

It takes three to five years to fully complete a Chapter 13 repayment plan; the fact that you filed for Chapter 13 will be reflected on your credit reports for seven years from the date of your initial bankruptcy request, notes the United States Bankruptcy Court.

Considerations

You can't legally get new credit without court permission while under a Chapter 13 plan. Also, debts such as child support, alimony, tax bills less than three years old and court fines are ineligible for bankruptcy restructuring.

Potential Costs

As of 2010, it costs $274 to declare Chapter 13 bankruptcy; also, keep in mind that you can be legally required to forfeit at least part of your tax refunds while in a Chapter 13 plan, according to "How to File for Chapter 7 Bankruptcy."

References

• "How to File for Chapter 7 Bankruptcy"; Stephen Elias, Albin Renauer and Robin Leonard; 2009
• U.S. Courts: Chapter 13