The advantage to a Chapter 13 bankruptcy is that you can keep the property that you may have otherwise lost in a Chapter 7. You may be able to avoid or delay foreclosure. You may be able to eliminate a second mortgage lien on a primary residence or reduce the loan balance and interest rate on a car.
In a Chapter 13 bankruptcy, you are required to repay your creditors over a three to five year period. Priority debts, such as child support and alimony, are usually paid in full. Regular payments on secured debts are also typically required. Your disposable income will then be used to make payments on your unsecured debt to the extent that you are able to do so. A Chapter 13 repayment plan can be modified on the basis of hardship. It can also be converted to a Chapter 7 in some cases. Remaining unsecured debt will be eliminated after the payment plan is completed as long as you are current on child support and/or alimony obligations and you have completed a budget counseling course with an approved agency.