A Chapter 13 bankruptcy is a reorganization of debt, allowing you to repay all or a portion of your debt through a Chapter 13 plan, while protecting your assets. It allows you to pay off your debt without having to deal with harassment from your creditors. Under a typical Chapter 13 repayment plan, you make monthly payments to a court appointed bankruptcy trustee for three to five years. The amount of your monthly payment is determined by several factors such as the amount of debt you have, your ability to repay and the value of your assets. The bankruptcy trustee distributes the money to your creditors.
A Chapter 13 bankruptcy is very powerful, as it can stop a home foreclosure, and allow you to make up missed mortgage payments and keep your home. A Chapter 13 bankruptcy also stops vehicle repossession, and in most instances allows you to recover a vehicle that has already been repossessed. It stops interest accruing on personal debt, including back taxes. It allows you to keep assets which you might not be able to under a Chapter 7 Bankruptcy, and can also remove certain liens against your property through the process of lien stripping.