For example, debts involving fraud and embezzlement may be dischargeable through a Chapter 13 if the plan is confirmed. Debts arising from child support, alimony, student loans, criminal fines and criminal restitution debts, on the other hand, are among those which cannot be discharged under either Chapter. However, Chapter 13 has an advantage over Chapter 7 because the Chapter 13 debtor is protected by the bankruptcy court while making payments under the plan. Creditors are prohibited from attempting to collect pre-bankruptcy debts from a debtor under either Chapter 7 or Chapter 13. This protection may be permanent if the plan provides for payment of the cosigned debt in full and is fully performed.
Debtors remain under court supervision for the life of the plan, up to five years.
They are not free to make new debts or sell assets without permission. Debtors who propose less than full payment to their unsecured creditors will be required to live on a budget for the life of the plan. The plan payments may be deducted directly from the debtor's salary by order of the court. If plan payments are not made, the case may be dismissed by the court on motion by the trustee or any creditor may petition the court to have their property returned. Some courts require that you surrender recently purchased property or luxury items before they will confirm a Chapter 13 plan.