Chapter 13 bankruptcy is a debt-consolidation and reorganization proceeding that is administered by the bankruptcy court as an alternative to a liquidation bankruptcy (Chapter 7). The main reasons why you may choose a Chapter 13 include: you make too much money to qualify for a Chapter 7; you own assets that are not exempt and you want to keep them, or you are behind on your car or house payments.
Generally, you will determine how much you can afford to pay your creditors on a monthly basis and for how long based on the results of the means test. You will be required to make monthly payments to a trustee, who is appointed by the court to administer your case. The trustee will send the money to your creditors according to a court-approved plan. You may be required to make monthly payments in Chapter 13 for up to 5 years. After all payments are made pursuant to your plan you will receive a discharge, discharging any remaining dischargeable debt that was not paid in full during the term of the plan.
Foreclosure & Repossession
A common reason for ling a Chapter 13 is to stop or preempt a foreclosure or to stop or reverse a repossession. A Chapter 13 allows you to keep assets that would otherwise be lost to your creditors by allowing you to make up any deficient payments during the pendency of your Chapter 13 plan. If you are facing a foreclosure or repossession or if you are currently involved in a foreclosure proceeding or your vehicle has been repossessed you may want to consult an attorney.
You have nothing to lose but your debt.