• Chapter 13 bankruptcy allows debtors to repay creditors over time in a court-approved three- or five-year repayment plan. Chapter 13 is a good option for debtors with a steady income and for debtors who are not eligible for Chapter 7 bankruptcy. Applicable terms to become familiar with include automatic stay, trustee, meeting of creditors, confirmation hearing, and discharge hearing.
  
  

Automatic Stay

• When a debtor files for bankruptcy, a court order called an automatic stay immediately goes into effect. An automatic stay prohibits creditors and collection agencies from engaging in collection activities. The stay lasts until the court confirms the Chapter 13 plan, or until the court dismisses the case, or until the court grants a creditor's motion to lift the stay.
  
  

Bankruptcy Trustee

• A bankruptcy trustee is appointed by the court to oversee the bankruptcy case. A trustee may offer financial advice, help in creating a budget, or modifying a repayment plan, and will oversee the meeting of creditors. Once a bankruptcy judge confirms a debtor's repayment plan, the trustee will distribute payments to the debtor's creditors for a statutory fee of about 10 percent of the amount paid to creditors in the plan.
  
  

Meeting of Creditors

• The purpose of the meeting of creditors is to allow the trustee and the creditors to ask the debtor questions under oath regarding information provided in the bankruptcy papers. The debtor must attend the meeting and may be required to bring important documentation, such as bills, bank statements, and tax returns. The meeting of creditors usually does not last more than 15 minutes, and most creditors usually do not come to the meeting.
  
  

Confirmation Hearing

• For a trustee to administer a Chapter 13 repayment plan, a bankruptcy judge must confirm the plan at a confirmation hearing. The hearing occurs within 20 to 45 days after the meeting of creditors. At the hearing, the judge will review the plan and any objections raised by creditors or the trustee. If the judge believes that the debtor is able to repay the debts under the plan, the judge will confirm the proposed plan. If the judge believes the debtor will have trouble making the payments, the judge may dismiss the case or convert it to a Chapter 7 bankruptcy.
  
  

Discharge Hearing

• After a debtor completes a Chapter 13 repayment plan, the bankruptcy court will issue a discharge order. In some cases, the debtor will have to attend a discharge hearing, while in other situations, the debtor will receive the discharge order in the mail a few weeks after making the last payment.