Chapter 13 bankruptcy is a form of reorganization under the U.S. Bankruptcy Code.  A person commits all of his disposable income to a Chapter 13 trustee for a period of thirty-six to sixty months.  The trustee makes monthly disbursements to creditors by following a priority protocol.  For example, secured debts are generally paid prior to unsecured debts.  Secured debts are those secured by property such as a house or car.  Unsecured debt is debt that is not attached to any property such as medical bills, personal loans and credit card purchases.  Those debts are paid last in the priority protocol and they often can be paid less that 100% on the dollar.

A person receives a discharge under Chapter 13 once the payment plan is complete.  Typical Chapter 13 cases involve saving a home from foreclosure or saving a vehicle from repossession.

However, please be aware that Chapter 13 is not easy.  It takes a strong dedication to budgeting for the long haul.  A Chapter 13 is a three to five year process of repayment.  Any bumps along the way can cause a case to be dismissed.  Often, a debtor under Chapter 13 will attempt to refinance out of the case or otherwise liquidate property to come out of Chapter 13 quicker.

Consult with an experienced bankruptcy attorney to determine if you can benefit by filing Chapter 13.