A chapter 13 bankruptcy is a reorganization for an individual person or married couple. A chapter 13 debtor proposes a chapter 13 bankruptcy plan that tells creditors whose debts are being restructured using the bankruptcy code, whose debts will be unaltered by the bankruptcy process, what creditors will be paid and what creditors will receive their collateral back in place of payment.
It is a summary proceeding that allows the Debtor to use the bankruptcy code to reorganize his or her debts in a way that best fits the needs and goals of the chapter 13 debtor and will closest fit the available income for payments to creditors.
The chapter 13 bankruptcy payment plan proposed by the debtor begins with the first payment being due 30 days from the date the bankruptcy is filed. So, if the bankruptcy case is filed on April 4th, then a payment will be due May 4th with an additional payment due each month on the 4th until the number of months provided for in the plan are completed. These payments are made to the chapter 13 trustee who facilitates the bankruptcy plan by making sure the plan adheres to all the rules of the court and the bankruptcy code. She does this by making sure that the unsecured creditor body is being paid according to the code, secured creditors are provided for, and that the payments under the plan are being made.
A Chapter 13 bankruptcy is advantageous for debtors who are seeking to save a home or car when they are behind on payments, debtors trying to pay off past due real estate taxes, pay off priority income tax debt owed to the IRS, or just have more debts than they can pay, but do not qualify for a chapter 7 filing.