Chapter 13 Bankruptcy FAQ

Questions:

• What is Chapter 13 bankruptcy?
• How much of my debt will I have to repay if I file for Chapter 13 bankruptcy?
• How long will my repayment plan last if I decide to file for bankruptcy under Chapter 13?
• We're facing foreclosure. If we file for Chapter 13 bankruptcy, can we keep our home?
• My only income is from retirement benefits. Can I use those to fund a Chapter 13 repayment plan?
• Along with other debt, I owe back taxes to the IRS. Can Chapter 13 bankruptcy help?

Answer:

Along with other debt, I owe back taxes to the IRS. Can Chapter 13 bankruptcy help?

One advantage of Chapter 13 over Chapter 7 bankruptcy is the debtor's ability to deal with debt that would not be wiped out in Chapter 7 bankruptcy -- including tax debt. (Other debts that cannot be canceled in Chapter 7 bankruptcy include child and spousal support arrears.) Although you must repay 100% of your tax debt (unless it qualifies for discharge because of its age), you may do so over the course of your Chapter 13 repayment plan, which usually lasts from three to five years. To learn more about the advantages of Chapter 13 bankruptcy, see Nolo's article Reasons to Use Chapter 13 Bankruptcy Instead of Chapter 7 Bankruptcy. Or, for more in general on the Chapter 13 bankruptcy process, see Chapter 13 Bankruptcy: Keep Your Property & Repay Debts Over Time, by Stephen Elias and Robin Leonard (Nolo).