Chapter 13
A chapter 13 is a reorganization bankruptcy for consumer debtors.  This involves paying into a plan for 3 to 5 years.  The reason one would ordinarily decide to go into a Chapter 13 bankruptcy is if the individual is in risk of losing his or her house and there is too much equity in the house to keep the house and file a chapter 7 at the same time.  A Chapter 13 bankruptcy is also known as a "wage earner's" bankruptcy, because you must be making a regular income in order to utilize Chapter 13 bankruptcy protection.

It is actually fairly difficult to complete a chapter 13 bankruptcy plan.  Many cases, especially in Rockford, require amendments of schedules and plans before the plan is complete.  Even then, there are many instances where the debtor or debtors (in the case of a joint filing) are unable to complete the chapter 13 bankruptcy and may even convert to a chapter 7 bankruptcy.  This must be kept in mind if you decide to do a chapter 13 bankruptcy.  3 to 5 years can be a long time to maintain this plan, and the trustee will expect you to pay nearly all of your disposable income into the plan every month and will scrutinize Schedules I & J (which state your income and expenses) for accuracy as well as to see if more money can be had for creditors.

Often, a mortgage will be paid for outside of a Chapter 13 plan.  Also, one advantage is that you can pay your attorney's fees and the majority of your filing fee (you must pay a portion at the time of filing) through the plan rather than up front as you would with a chapter 7 plan.  Once you successfully complete the plan, you will receive a discharge of your unsecured debt.  Just remember, this is a long term commitment.  However, even if you cannot successfully complete the plan, filing can give you time to stop a foreclosure and save your home.

There are also income and debt limits for a chapter 13.  If you exceed these limits then you must either file a chapter 11 (available to anyone even if it is not technically a business reorganization, however it is more expensive to file a chapter 11) or a chapter 7.