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In Chapter 13, a plan is established to pay off all or a portion of your debts. Some people choose to file a 13 rather than a 7 because they can protect more of their assets under a 13. You pay a trustee, (like an administrator) he pays your creditors (kind of like how the government distributes your taxes). The one constant in the bankruptcy universe; once you file, your creditors can't pursue you, or your property, outside of the bankruptcy proceeding.

Here's how it works; if you decide to file a 13, a trustee will be appointed by the court to administer your case. They go over your petition and may make suggestions in order for you to better comply with the laws. Your creditors are then notified that you have filed and are given the opportunity to file a claim. The clerk of the court schedules a meeting between you and your creditors (read; mandatory attendance on your part) The trustee reviews the petition and presents the plan to your creditors.

There are two types of creditors. A secured creditor has to file a claim before the first creditors meeting in order to be classified as secure. (Huh?) Simply put, a creditor is secured if you have put up property as collateral. You have a home and pay a monthly mortgage; your home is security, or collateral for the installments that you haven't paid yet.

An unsecured creditor means that there is no property put up as collateral. A credit card, doctor or hospital bills, (I don't want to think about what they'd foreclose on) or a bank card, are all unsecured. These creditors must file within six months of the time you filed the bankruptcy petition. As with a 7, the forms are mailed to your creditors letting them know when to show up for the creditors meeting.

Then, disbursements (money to your creditors) are paid. Usually your disbursements are paid as follows; administrative costs first, (lawyer fees), priority claims second, (taxes and say, child support arrears) , then secured stuff, and last, but certainly not least, unsecured claims. The judge reviews the plan and gives it the O.K. You are notified that you're required to pay a monthly amount to the trustee. Finally, the trustee disburses funds each month to the creditors, according to your plan. Note that I said you pay the trustee. Don't miss a payment! If you miss a payment, the whole enchilada may be dismissed by your trustee. There is a lesson here; be nice to your trustee, and they'll be nice to you! When all is done, relax, you're now debtless. (but not clueless)

A couple of other points; while you are in the Chapter 13, you can convert to a Chapter 7, or dismiss it altogether. Why would you convert from a 13 to a 7? Let's say you have a lot (duh!) of debt and a good job. You decide to reorganize. In the middle of your 13, you lose your job. The remaining debt can be transferred into a 7. As in a Chapter 7, certain long term debts; taxes, child support, maintenance, alimony, and student loans are not dischargeable. If you're on the ten-year plan for your B.A., you now have even more time to get your transcripts released.