Chapter 13 Bankruptcy

Category: legal

A personal bankruptcy process enabling individuals with regular income to develop a plan to repay all or part of their debts.

Chapter 13 is the "wage earner’s plan." Instead of liquidating assets, the debtor proposes a three-to-five-year repayment plan to the court. It is heavily utilized by individuals facing home foreclosure, as it allows them to catch up on missed mortgage payments over time while keeping their property.

Common Examples

• The homeowner filed for Chapter 13 to halt the foreclosure auction and consolidate their debts into a manageable monthly court payment.
• Unlike Chapter 7, a Chapter 13 filing requires the debtor to prove they have a stable, reliable income source to fund the repayment plan.