Chapter 13 – You can usually keep your property, but you must earn wages or have some other source of regular income and you must agree to pay part of your income to your creditors. The court must approve your repayment plan and your budget. A trustee is appointed and will collect the payments from you, pay your creditors, and make sure you live up to the terms of your repayment plan.
There are several advantages to filing under a Chapter 13 repayment plan. One advantage is the ability to strip qualified second mortgages from your home, which lowers your total principal balance you owe on your home. Another advantage is the ability to repay secured creditors such as mortgage arrears, over time, usually a period between 3 to 5 years. Chapter 13 can also help you repay non-dischargeable taxes over time, often times interest free. Lastly, Chapter 13 allows you to cram down certain secured debts like your cars to the current market value.