13 is used to reorganize an individual's (debtor's) finances into a single monthly payment paid to the Chapter 13 Trustee. The Trustee then disburses the money to the parties who are due to be paid under the debtor's Chapter 13 Plan. As mentioned above, each case is unique and the parties who are due to be paid under Chapter 13 law depend on the nature of debt and income of the debtor. In most cases, reorganization includes repayment of secured debt and elimination or reduction of unsecured debt.
7 is used to eliminate most unsecured debts. In addition to this, secured debts (debt with collateral) can also be eliminated by the surrender of the collateral. If a Debtor wishes to keep collateral
, Creditors will usually issue a reaffirmation agreement which the Debtor signs stating that they are renewing their obligation to pay the secured debt. There are dangers associated with reaffirmation agreements. Any debtor considering one should seek advice from their attorney.