• Declaring bankruptcy under Chapter 13 is one way that the federal government has provided as a means for individuals or families to dig themselves out of what might appear to be an insurmountable debt load. Individuals or families that declare Chapter 13 bankruptcy agree to pay back their debt within three to five years and in return are given legal protection against wage garnishments, lawsuits and harassment. In addition, individuals or families are assigned a trustee to serve as a liaison between the debtor and creditor.
  
  

Stops Creditors from Calling You

• When you declare Chapter 13 bankruptcy, by law, all the companies you owe money to are no longer allowed to call, write or contact you in other ways to get you to pay them for the duration of the bankruptcy arrangement. Generally, this is three to five years. Also, if your account is turned over to a debt collection agency, they too are barred from contacting you as well.
  
  

Helps Get Your Debt under Control

• As part of the Chapter 13 bankruptcy process, a trustee is assigned to the case to serve as payment processor. At the bankruptcy hearing, a payment plan is submitted to the court that outlines how the debtor intends to pay off the debts they owe. The judge then has the option of modifying the plan. Once the plan is agreed to by both parties, the relationship between creditor and debtor concludes. The debtor makes one lump sum payment a month to the trustee who then pays the creditors. A side benefit of the consolidation process is that if the debtor follows the terms of the bankruptcy agreement through to completion, the debtor will emerge from bankruptcy debt free with the possible exception of secured loans that exceed the time limit set forth in bankruptcy court.
  
  

Allows You to Keep Your House

• During the Chapter 13 bankruptcy proceedings, you are allowed to keep your house, your car and any other items purchased through a secured loan as long as you agree to such an arrangement and then continue to make on-time payments on those loans.
  
  

Eases Financial Stress

• During the Chapter 13 bankruptcy proceedings, debtors are assigned a trustee to serve as overseer of the payment plan and as a go-between for the parties involved. Thus, debtors never have to speak with or hear from their creditors during the entire payment process. In addition, the trustee serves as a type of financial cop to ensure that neither party to the bankruptcy proceedings violates any terms of the agreement.
  
  

Reduces Debt Amount

• Under Chapter 13 bankruptcy proceedings, creditors are generally disallowed from charging penalty fees or increasing interest rates on outstanding loans or credit card accounts. In addition, due to the time constraint of the loan repayment process and income limitations of the debtor, the outstanding debt may be reduced by the bankruptcy judge and monthly payments to creditors lessened.