Bankruptcy Chapter 13 Law and Legal Definition
Bankruptcy law provides for the development of a plan that allows a debtor, who is unable to pay his creditors, to resolve his debts through the division of his assets among his creditors.The philosophy behind the law is to allow the debtor to make a fresh start, not to be punished for inability to pay debts. Bankruptcy law allows certain debtors to be discharged of the financial obligations they have accumulated, after their assets are distributed, even if their debts have not been paid in full.
Chapter 13 allows individuals who have reliable incomes to pay all or a portion of their debts under protection and supervision of the court. Under Chapter 13, you file a bankruptcy petition and a proposed payment plan with the U.S. Bankruptcy Court. The law requires that the payments have a value at least equal to what would have been distributed in a Chapter 7 liquidation case. An important feature of Chapter 13 is that you will be permitted to keep all your assets while the plan is in effect and after you have successfully completed it.