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Chapter 13 is a form of bankruptcy that allows a person to keep their property by agreeing to pay their creditors out of future income over a three to five year period. A payment plan is written up by the debtor, with attorney guidance, and must be approved by the bankruptcy court.
Once the payment plan has been established, the creditors may not attempt to collect any debt during the payment period other than that allowed by the bankruptcy court. The creditors typically end up with less money than they are owed, and the individual's credit report carries a record of the bankruptcy for ten years, which greatly affects that person's ability to borrow money.
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