Chapter 13 bankruptcy is for people who are earning a steady income, whether it be through employment, their retirement pension, etc. and are unable to pay their debts. The courts will execute an agreement that will require you to pay back a portion of your debts over a period of time.
I need to reiterate this point before we proceed: ALWAYS seek the advice of an attorney prior to filing for bankruptcy. Learn about bankruptcy and its affects and make a rational, calculated decision. You can file for bankruptcy yourself, but I recommend having an attorney handle it in its entirety. More on that later.
The way Chapter 13 bankruptcy works is simply that you file a number of forms with the court such as an application for bankruptcy, an income statement, the amount of your debts, the kind of debts (credit card, mortgage, auto loan, etc.). You will also list your assets so the court can determine your net worth and whether you have income, or potential income, to contribute to your debt restructuring. For example, if you have $200,000 in total debt between your mortgage, credit cards and auto loans, but have $100,000 equity in your 2nd home, you have $100,000 to contribute to your debt restructuring. It does not mean that money will be used, but it is available and needs to be reported to the courts for accurate processing of your filing.
It is imperative that you include all your information when filing the paperwork for bankruptcy. If you leave something out, it will not be discharged and you will have to repay the debt. If you do not disclose all of your assets, you could be liable for fraud.
You will have to give the court your repayment plan for your unsecured debts such as your credit cards, which is the most common unsecured debt for people filing for personal bankruptcy. The court may accept or reject your plan, so be prepared to renegotiate. For your secured debts, you are required to pay the minimum that your creditor will accept or you must surrender the item which you the debt is attached to.
Examples of secured debt would be your mortgage, auto loans, personal loans. If you owed $2000 on your car that is worth $6000 you have $4000 equity. The company that holds the note (the loan) might say they would be willing to accept a reduction of the debt you owe to $1000. If you do not accept their offer, the company will get your car.
All of the paperwork discussed here would be handled by your attorney. I cannot overemphasize the importance of getting an attorney for this process. There are books dedicated to teaching you to declare bankruptcy yourself. If the law changes between the day the book was published and your filing, it is your responsibility to understand the changes and how they affect you. If there is something that comes up in court that you do not understand, you are at a disadvantage as you must make a decision. Get an attorney.