• Chapter 13 bankruptcy--also known as individual reorganization--allows people to restructure their debts into one manageable payment per month. The court oversees the payment plan to ensure debtors pay back the maximum amount of debt without causing further financial strain. For this reason, you must have regular, discretionary income after paying household bills and expenses to qualify for Chapter 13 bankruptcy.
  
  

What Is the Chapter 13 Bankruptcy Process?

• The Chapter 13 process starts with filing the bankruptcy petition in which you include information about all of your debts, expenses and income. You must take a credit counseling course from a court-approved instructor within 180 days of filing your petition. You will receive a date for the 341 Meeting and the court will appoint a trustee to manage your case. You must create a repayment plan with the help of your attorney and the trustee, then attend the 341 meeting to answer questions from the trustee and creditors. Continue to make payments for the duration of the three- to five-year repayment period. The court will eliminate any dischargable debts remaining at the end of the repayment plan.
  
  

When Should I File Chapter 13 Bankruptcy?

• You should file Chapter 13 bankruptcy if you have non-exempt property such as houses or cars with a lot of equity (or value above any liens) in them because Chapter 13 does not require liquidation of your assets. You must file Chapter 13 bankruptcy if you earn more than the median income in your state and have at least $100 in disposable income each month.
  
  

What Is The 341 Meeting?

• The 341 Meeting, also called the Meeting of Creditors, allows the trustee to go over your bankruptcy petition and ask questions regarding your income, assets, expenses and debts. Creditors may also asks questions pertaining to your case but creditors often do not attend the 341 meeting. You have to answer all questions honestly because you will be under oath. If you have questions for the trustee about your case, you can ask them at the meeting as well.
  
  

What Is The Repayment Plan?

• The Chapter 13 repayment plan allows you to make a single payment on all of your debts for three to five years. Although you create your own plan, the court will verify that it adheres to certain guidelines. It must pay back as much debt as possible and the court gives priority to secured debt such as vehicle loans and mortgages. The plan must also include all income after household expenses. You have to notify the court if your income changes so you can adjust your payments. Failure to do so may lead to the court dismissing your case.
  
  

What Happens If I Don't Make Payments?

• If you fail to make payments, the trustee can dismiss your case--opening you to creditor collection activities once again--or convert it to Chapter 7 bankruptcy and seize your assets for liquidation. If you cannot make payments due to a short-term issue, you may be able to request a temporary forbearance.
  
  

What Happens To My Tax Return?

• While you are in a Chapter 13 bankruptcy repayment plan, any tax return you receive must go to the trustee so she can disperse it to creditors. Once the payment plan is complete you will no longer have to surrender your tax return.