What is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy — sometimes called a "wage earner's plan" — is a reorganization bankruptcy that allows individuals with regular income to repay all or part of their debts over a 3-to-5-year period. Unlike Chapter 7, which eliminates debt quickly through liquidation, Chapter 13 creates a structured repayment plan that gives you time to catch up on missed payments while keeping your assets.

Hundreds of thousands of Americans file Chapter 13 each year, often to save a home from foreclosure or protect property they couldn't keep under Chapter 7.

How Chapter 13 Works

You propose a repayment plan. When you file, you submit a plan to the bankruptcy court that shows how you'll repay your debts over 36 to 60 months. The plan must satisfy certain legal requirements: secured creditors (like your mortgage lender) get paid what their collateral is worth, priority debts (like taxes) get paid in full, and unsecured creditors receive at least what they'd get in a Chapter 7 liquidation.

A trustee oversees payments. Once your plan is approved, you make monthly payments to a Chapter 13 trustee, who distributes funds to creditors according to the plan. You don't pay creditors directly.

Automatic stay protects you. The automatic stay activates immediately upon filing, halting collection actions, foreclosures, and wage garnishments while your case is active.

Discharge after plan completion. When you complete all payments under the plan, the court discharges your remaining eligible unsecured debts — similar to a Chapter 7 discharge, but after you've repaid a portion.

Key Advantages of Chapter 13

• Save your home: Chapter 13 lets you catch up on mortgage arrears over time, which can stop a foreclosure in its tracks.
• Keep non-exempt property: Assets that would be sold in Chapter 7 can be retained if your plan pays unsecured creditors at least their liquidation value.
• Discharge more types of debt: Certain debts not dischargeable in Chapter 7 — like mortgage deficiencies — may be addressed in Chapter 13.
• Co-debtor protection: The automatic stay can extend to co-signers on consumer debts, protecting them from collections during your case.

Who Should Consider Chapter 13?

Chapter 13 is often the better choice if you:

• Have regular income (employment, self-employment, or regular benefits)
• Are behind on your mortgage and want to save your home
• Own property that exceeds Chapter 7 exemption limits
• Have non-dischargeable debts you want to manage through a structured plan
• Filed Chapter 7 within the past 8 years and are not yet eligible again

If you're unsure which chapter fits your situation, Easy-Case's screener walks you through your options.

How Long Does Chapter 13 Take?

The active repayment period lasts 3 years if your income is below your state's median, or 5 years if above it. See the full timeline breakdown. Unlike Chapter 7, which ends at discharge, Chapter 13 requires consistent monthly payments for the full plan period.

Cost and Fees

The Chapter 13 court filing fee is $313. Easy-Case charges $49 for petition preparation. See the full cost breakdown.

Comparing Your Options

Not sure whether Chapter 7 or Chapter 13 is right for you? Easy-Case's free screener analyzes your income, assets, and goals to give you a personalized recommendation.