Chapter 13 is a repayment plan for individuals with regular income and unsecured debt less than $290,525 and secured debt less than $871,550. The debtor keeps his property and makes regular payments to a trustee out of future income over about a 3 to 5 year period. Repayment in Chapter 13 generally ranges from 10 percent to 100 percent, depending on the debtor’s income and the type of debt.
In reorganization bankruptcy, the court basically decides how you will repay your creditors – some you will have to pay in full, some only a percentage, and some will not have to be paid at all.
In Chapter 13 bankruptcy, you file a proposed payment plan with the court, describing how you will repay your creditors. You then meet with creditors who discuss your plan with you, and afterwards, the judge will decide whether or not to accept your repayment plan. If you follow your repayment plan, the remaining portion of your dischargeable debt will be wiped out at the end of the three or five year period.