This is a type of bankruptcy in which you enter into a plan to pay money to your creditors through a court-appointed trustee for 36 to 60 months. Often you only pay the creditors a fraction of what you owe, and then the balance is discharged upon completion of your plan. The amount of your payment is determined by a number of factors, including your income, monthly expenses, assets, and a calculation called a Means Test, which is based on your income during the six-month period prior to filing.
Chapter 13 also gives people who are behind on their mortgage or other secured debts (like car loans) the ability to keep their house or car by paying the arrears in monthly installments through their plan, while making the regular payments that come due after their case is filed directly to the creditor or to the trustee. As long as you comply with the plan, your property cannot be taken or sold, and you will be caught up on your payments when the case is completed.
In certain situations, Chapter 13 also permits debtors to "cram down" vehicle loans, which means that you can obtain the title to the vehicle by paying only its current value plus interest through your plan, rather than the full balance due under the contract. Moreover, in some instances, you can eliminate second and third mortgage liens against your residence if there is no equity in the property to support them.
Again, bankruptcy law is complex, and you should contact a qualified attorney to determine how Chapter 13 will work for you.