The Start

• Chapter 13 bankruptcy allows debtors to create a repayment plan. A typical repayment plan lasts from three to give years. During this time the debtor is allowed to repay debts over a prolonged period. Once the repayment period has ended the debtor's outstanding debts are discharged permanently. Certain debts such as child support and taxes cannot be discharged in a Chapter 13 bankruptcy plan.
  
  

Payment Plan

• Once a Chapter 13 bankruptcy has been filed the debtor's finances are placed under the supervision of a trustee. The trustee is a court-appointed official who will make sure that all terms of the bankruptcy are adhered to by the debtor during the repayment period.
  
  

Course of Action

• If the debtor falls behind on payments to the Chapter 13 repayment plan the trustee has several options. He may grant the debtor a grace period if he find the debtor cannot make payments temporarily because of job loss or illness, for instance. If the trustee finds debtor has chosen to avoid repayment without cause, he may dismiss the Chapter 13 plan. The trustee will file a document called a Motion to Dismiss. The Motion to Dismiss asks the court to remove the debtor from the protection of the court. The judge may also decide that the debtor qualifies for a hardship plan if the debtor has a serious disabling illness. The judge may also decide that the Chapter 13 plan can be modified and payments extended as agreed upon by the trustee and the debtor's creditors.
  
  

After the Motion to Dismiss

• Twenty Dollar Bill
  
  If the judge decides that the trustee's Motion to Dismiss is valid, the case can be dismissed and the debtor denied protection from creditors. The debtor may have to liquidate assets to satisfy creditors. This form of bankruptcy is called Chapter 7 bankruptcy. Chapter 7 debtors may lose their primary residence and vehicle to satisfy debt. The debtor may also decide to refile for Chapter 13 bankruptcy. This will set the bankruptcy process in motion again. Additional attorney and filing fees may be incurred when the Chapter 13 motion is refiled.