In Chapter 13 Bankruptcy, what must individuals do?

In Chapter 13 bankruptcy, individuals develop a repayment plan to manage their debts, which is where the requirement to continue earning and pay missed payments to creditors comes into play. This type of bankruptcy is specifically designed for individuals with a regular income who want to keep their assets, such as their home or car, while repaying some or all of their debts over a period of time, typically three to five years.

During this repayment period, individuals make monthly payments to a bankruptcy trustee, who then distributes those payments to creditors. The plan allows individuals to catch up on missed payments and manage their debts in a structured way, while also offering protections against foreclosure and repossession. This is distinct from other bankruptcy options where liquidation of assets may be required or debts might be discharged outright without repayment.

In contrast, the options related to paying off all debts with no exceptions, filing for total debt liquidation, or seeking forgiveness for all outstanding debts do not align with the core principles and processes of Chapter 13 bankruptcy. Therefore, continuing to earn income and making payments towards missed debts is a key characteristic of this bankruptcy chapter.