Chapter 13 of the U.S. Bankruptcy Code provides a means to repay debt or reorganize debt.  A Chapter 13 bankruptcy case can be used to save a home from foreclosure, a vehicle from repossession and stop garnishments.  However, the debt reorganization case takes a very strong effort on the part of a debtor.  For example, a debtor must commit all of his disposable income for the benefit of creditors over a period of thirty-six to sixty months.  For many debtors, this is a formidable challenge. 

A typical Chapter 13 debtor may have fallen behind due to illness, injury, job loss, divorce or other personal issue.  Chapter 13 allows a mechanism to get back on track while keeping property free from creditors.  The payments to creditors are made by a Chapter 13 trustee who is paid an administrative fee for his efforts.  The trustee will also insure that the debtor is submitting all of his disposable income each month.  If the debtor fails to make timely payments, the trustee will move to dismiss the case.  If the case is dismissed, creditors will be free to pursue the debtor and his property.  To ensure success, a debtor should be placed on payroll control.  Thus, if the debtor maintains his employment, he will have a greater chance of success.

A debtor can payoff the Chapter 13 sooner by refinancing debt or otherwise liquidating property.  In many cases, Chapter 13 serves as a temporary way of dealing with debt.  Only a small percentage of cases actually complete under Chapter 13.