Chapter 13 is debt reorganization through the help of a bankruptcy trustee.  The trustee acts as a disbursement agent distributing funds to creditors over a period of thirty-six to sixty months.  It is often used to repay mortgage arrears while being allowed to make the current mortgage payment while in the repayment plan.  It also gives an opportunity for a debtor to repay all or a portion of his debts over an extended period of time.

Job loss, illness, injury, divorce or other family crises can cause one to fall quickly being on his debt obligations.  Chapter 13 provides a mechanism to repay debts at a monthly payment that the person can afford.

The trustee will verify that all of the person’s disposable income is being paid toward creditors.  The IRS standards are invoked to determine if the debtor is allocating too much or too little in terms of housing, transportation, food, clothing, etc. 
  
Should the debtor complete the payment plan, he will receive a discharge.  In many cases, the debts can be paid back at less than 100%.  It all depends upon the income, expenses, assets and liabilities of the debtor.  Please note that the majority of Chapter 13 cases do not complete.  It is very difficult to stay perfect on a payment plan that lasts anywhere from 36 to 60 months.  However, it does afford the debtor some time to liquidate on their own terms instead of losing property to a foreclosure Sheriff’s sale.