CHAPTER 13. Personal Reorganization; Wage Earner Plan; Adjustment of Debts of an Individual with Regular Income.
This is where you propose a plan to pay all or part of your debts through a court trustee. For instance, someone may pay $50 per week from their paycheck. Each month the trustee uses the money to write 8 or 9 checks, one for each of the creditors who are bound to accept this. At the end of the plan, usually 3 years, you are excused of any balance. In some cases the debts are paid in full, in others they may only get pennies on the dollar.
Under Chapter 13 there is no liquidation of property, so you can keep what you own, even if it exceeds the basic property exemptions. This is available even if a prior bankruptcy was filed in the past 8 years. This chapter stops mortgage foreclosures and allows missed payments to be made up over time. Back Income taxes can be included for payment with no interest. Vehicle loans can be reduced to the value of the collateral (with some restrictions). Attorney fees are often deferred and paid through the plan.