Persons in Chapter 13 generally keep all of their property, whether or not it is exempt, but they make regular payments on their debts out of the money that they earn after filing the bankruptcy case.
These payments must be at least as much as would have been paid to creditors in a Chapter 7 bankruptcy. (this is called a liquidation analysis) The payments are made to a trustee, who distributes the payments to the creditors.
The payments are made in regular installments, according to a plan that the debtor draws up, with the help of an attorney. If a person does not have enough excess income to make a payment, they may want to consider Chapter 7 bankruptcy.
The plans last either until the debts are paid in full or until the end of a three to five year period.
The debtor receives a discharge at the end of the plan.
Before filing Chapter 13, debtors are required to complete a credit counseling session with an approved counseling agency.
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