What you need to understand about Chapter 13 bankruptcy
Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, many cases that once were eligible for Chapter 7 relief now must be filed as Chapter 13 bankruptcies.
Chapter 13 bankruptcies can be useful if a debtor faces foreclosure, repossession of a vehicle or wage garnishment. It also protects debtors from persistent calls from creditors.
When you file for Chapter 13, we include a proposed plan to pay all priority claims against you, including taxes, in full. Once the bankruptcy court appoints a trustee, who approves your plan, your creditors receive and have the right to accept or reject the plan. If it is approved, you make monthly payments to the bankruptcy trustee, who then distributes the funds to your creditors according to your plan.