Chapter 13:

Chapter 13 of the Bankruptcy Code allows individuals or married couples to reorganize their debt and make a single monthly payment on all their bills. Unlike a Chapter 7, you do not simply walk away from you bills, but instead propose a "best efforts" plan to pay off your bills over a three to five year period. In exchange, Chapter 13 offers a number of important advantages over Chapter 7.

In the first place, you can include just about any kind of bill in a Chapter 13 bankruptcy plan: car loans, taxes, student loans, child support arrears, home loan arrears, and more.

This means that if you are behind on your car payments, or your home mortgage payments, you may be able to fix the problem with a Chapter 13 bankruptcy. Chapter 13 is only open to those who have a reliable source of income, and you must be able to propose a reasonable plan for paying your bills, but working with an experience attorney it is usually possible to build a monthly payment program which is far more affordable than any other solution. What would your monthly payments be in a Chapter 13? It's impossible to say without a careful review of your assets and liabilities, but in general the Chapter 13 payment is intended to be affordable, and is usually based on your monthly income and ability to pay. Once you are in a Chapter 13 plan, the only other payments you need to make each month are your rent (or mortgage), food, utilities, etc. All car loan payments, taxes, mortgage arrears, and most other bills are included in your monthly Chapter 13 bankruptcy payment.

A Chapter 13 plan lasts from three to five years, and at the end of your plan you receive a discharge from the court for all the bills which you included in your bankruptcy.

A Chapter 13 is similar to a consumer credit counseling plan, except that in Chapter 13 you can discount certain kinds of debts and so your monthly payment is going to be significantly less through the Chapter 13 bankruptcy program. Chapter 13 is frequently where people turn after they have tried unsuccessfully to complete a consumer credit counseling program.

Chapter 13 is a flexible program, it accomodates a variety of different situations, and is a good option for those who can afford to pay back some, but not all, of their bills.