Most people contemplating bankruptcy have two types available to them bankruptcy chapter 13 or chapter 7. Chapter 13 is when a plan is made to pay back creditors a certain amount over a three to five year period.
When petitioners has disposible income left after living epenses they are required to file chapter 13 as opposed to chapter 7. The available money must be enough to pay back at last 10% of what is owed to all creditors over 3 to 5 years or the bankruptcy will become a chapter 7 liquidation.
If the chapter 13 plan is accepted by the bankruptcy court payments are made to the trutee who then distributes the money to the creditors according to the plan. If the creditors are paid back within three years the banruptcy is over if not the payments continue for up to two more years. At that point all remaining debts are discharged except those that cannot be discharged a a matter of law, for example federal icome taxes.
