CHAPTER (13) is generally referred to as a consolidation case. In a Chapter 13 one makes a monthly payment generally based on what they can afford for three (3) to five (5) years. Almost any type of debt can be dealt with by a Chapter 13, including taxes, student loans, and support related debts. Also, home loans and automobile payments that are behind can be paid in the case, stopping foreclosures and repossessions.

The monthly payment is usually based on how much you can afford. The payments are made to the court-appointed Trustee which disburses the money to creditors based on a court approved plan. The plan determines who gets paid, and how much. In many cases creditors recieve less then 100%. The remainder is eliminated (discharged) when all the payments have been made.

Immediately after your case is filed the court issues a restraining order which stops almost all collections actions by creditors. This means the creditors cannot contact you, or take collection actions against you such as wage garnishments and bank account levies.

The process takes about three to five years and there is usually only one hearing which is about one month after the case is filed. The hearing is not held is not held in a court room, but in a meeting room and the hearing is conducted by a Trustee. There may be as many as a dozen hearings scheduled each hour and each case usually only take a matter of minutes. A few months after all payments have been made, the court issues a Discharge Order which prevents any unpaid balance on most types of debts being collected.

If someone has, (1) too much property, (2) the type of debts that cannot be dealt with by a chapter 7, or (3) is able to make a substantial payment towards the debt, a Chapter 13 is usually a good alternative.