Eligibility

• As of August 2009, to be eligible for chapter 13 bankruptcy, you must have less than $336,900 in unsecured debts (credit cards or personal loans), and secured debts (mortgages, car or boat loans) have to be less than $1,010,650. Also, the bankruptcy filer must have attempted to receive credit counseling first within 180 days of filing.
  
  The advantages of chapter 13 bankruptcy vs. chapter 7 bankruptcy are that the individual can stop foreclosure proceedings on a delinquent mortgage, renegotiate other secured debts for up to five years (which will lower payments), and be able to negotiate one monthly payment for all debts, which in turn will stop the phone calls from harassing creditors.
  
  

Filing and payment plan

• To file in a bankruptcy court, you must pay a $274 filing fee (as of August 2009) and attach a record of your assets and liabilities, your income and expenses, and a statement explaining your financial affairs and why making payments to creditors is increasingly difficult. A certificate showing that credit card counseling was attempted is also required. Copies of previous tax returns will need to be submitted with his packet as well. Finally, the debtor will need to list all of their creditors and the amounts they are owed.
  
  Once a petition is filed, all collection actions against the individual or her property are stopped. Also, all lawsuits against a debtor are dismissed, and if foreclosure proceedings have started, they too will be stopped. Less than two months after the filing, a court-appointed trustee will hold a meeting with all of the creditors and the debtor, in which a plan that everyone can agree upon will be negotiated for repayment.
  
  Once all parties agree on a plan, the debtor will appear in front of a bankruptcy court judge to present the plan and receive approval. If all creditors are on board with the plan, the judge will typically grant approval fairly readily. The debtor will have to begin making payments to the trustee within 30 days of the court hearing, on a biweekly or monthly basis; it is the trustee's job to disperse the payments to the creditors as noted in the agreed-upon plan.
  
  Once all payments on the repayment plan have been made, a bankruptcy judge then discharges the individual after debtors certify that they have received all of the agreed-upon monies that are owed to them. If individual runs into a hardship, such as job loss or medical issues, a hardship discharge can be issued by a judge before the entire amount is paid down.