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A Chapter 13 Bankruptcy is a reorganization of your debt. Some call it a bill consolidation through the court system. Unlike a Chapter 7, which simply liquidates your unsecured debt and has no payments, a Chapter 13 Bankruptcy is a powerful tool to pay creditors on terms that are favorable to you. This chapter of bankruptcy allows you to keep property that has delinquent payments. A person normally utilizes a Chapter 13 Bankruptcy in the following situations:

    1. First, a Chapter 13 Bankruptcy can allow a Debtor to stop the foreclosure of a residence or repossession of a vehicle. The Chapter 13 repayment plan allows the Debtor to take any mortgage arrears and pay back the mortgage company over a three to five year period. It also allows you to completely refinance automobile loans and generally lower interest rates. This provides you an opportunity to impose payment terms favorable to you, rather than unrealistic terms imposed by a creditor. 

    2. Furthermore, debts that may not be dischargeable in a Chapter 7 can be paid back through a Chapter 13 Bankruptcy. Examples of non-dischargeable debts are delinquent income taxes and back due child support. The Chapter 13 Bankruptcy allows the Debtor to repay these debts over the three to five year payment plan and in most situations prohibits wage garnishment.

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