Chapter 13 is a powerful method for repaying all or a portion of one’s debts over a period of 36 to 60 months.  The debtor pays a Chapter 13 trustee, who in turn, distributes funds to creditors.  Secured creditors are paid as a priority ahead of the general unsecured creditors.

Chapter 13 involves the filing of a petition as well as a plan to repay creditors.  A confirmation hearing is held whereby the Chapter 13 trustee will either recommend that the plan be confirmed or not.  Of course, the judge can confirm a case over the objection of the trustee.  However, if you want to have a successful Chapter 13, you would be wise to satisfy the trustee.  If the trustee is seeking clarification or amendments to schedules, try to make such amendments.  In my experience, it is very difficult to have a case recommended for confirmation when the trustee is arguing vociferously against it.

Once a case is confirmed, the burden continues with the debtor making the required payments.  In addition to the trustee payment, the debtor may have specific payments to make outside of the Chapter 13.  These can often include post-petition mortgage payments, leased auto payments, association fees and child support, alimony or maintenance payments.

Many Chapter 13 cases fail because the debtor is unable to maintain both the Chapter 13 trustee payments and their post-petition mortgage payments.  However, Chapter 13 often does provide for time for the debtor to refinance or sell the property, effectively paying off the debt.