What is Chapter 13
Chapter 13 of the United States Bankruptcy Code (Title 11) is designed for you to pay back all or some of your debts within 60 months (5 years). However, while your case is pending the Automatic Stay is in effect and all creditors must cease all collection actions against you. Furthermore, all creditors are required to file a claim with the Court if they wish to receive payments.
The debtor must make the same disclosures to the Court that must be made in a Chapter 7. However, because you will be paying back either some or all of your debts, you must also file a Chapter 13 (payback) Plan with the Court. Payments are usually done through a wage assignment that the Chapter 13 Trustee arranges with your employer.
Chapter 13 is usually required or recommended for debtors who need to save their home by stopping a foreclosure sale, or most of their debts are non-dischargeable, or are ineligible for a Chapter 7 discharge because of the following reasons:
1) They have assets that are subject to liquidation.
2) Their income is too great.
3) They already received a Chapter 7 discharge in the past eight years.