Chapter 13 Bankruptcy: Repayment Plans Explained

Chapter 13 bankruptcy reorganizes your debts into a single court-approved plan that you pay off over three to five years. Instead of liquidating your property, it lets you keep what you own and catch up on missed mortgage or car payments while an automatic stay holds creditors back.

What Is Chapter 13 Bankruptcy?

Chapter 13 is the "reorganization" chapter of the U.S. Bankruptcy Code for people with regular income. You propose a repayment plan, a trustee collects your payments and distributes them to creditors, and at the end you receive a discharge of most remaining balances. It is the second most common consumer filing after Chapter 7. In 2025, U.S. courts recorded 235,923 Chapter 13 cases nationwide.

People choose Chapter 13 for reasons Chapter 7 can't address: they earn too much to pass the means test, they are behind on a mortgage they want to save, or they have property a Chapter 7 trustee could sell. If you're still deciding between the two paths, see our full breakdown of Chapter 13 vs Chapter 7 bankruptcy.

How the Repayment Plan Works

The plan is the heart of a Chapter 13 case. Under 11 U.S.C. § 1322, it sets out how much you pay each month and how that money is split among your creditors. When you file, an automatic stay immediately stops most collection activity, including foreclosure and repossession. You then make one payment to the Chapter 13 trustee each month, and the trustee pays your creditors according to the plan.

Not all debts are treated the same. Priority debts like recent taxes and child support must be paid in full. Secured arrears, such as the payments you missed on your house, are cured over the plan. Whatever disposable income is left goes toward unsecured creditors, who often receive only a fraction of what they are owed. Before the plan takes effect, the court must confirm it under 11 U.S.C. § 1325, which tests it for good faith, feasibility, and fair treatment of creditors.

How Much Your Monthly Payment Will Be

There is no flat Chapter 13 payment. Your monthly amount is whatever it takes to fund the plan: enough to cover priority debts, cure any secured arrears, and turn over your disposable income to unsecured creditors. Disposable income is what remains after allowed living expenses, and the calculation borrows from the same framework as the Chapter 7 means test.

Your income also sets how long you pay. If your household income is below your state's median, the plan can run as little as three years. If it is above the median, the law generally requires a five-year commitment period. Those medians vary widely by state and household size. A single filer's median income is $53,978 in Mississippi but $88,202 in Massachusetts, and every state adds $11,100 for each person in a household beyond four. Because the figures are updated periodically and differ everywhere, check your state's page for the current numbers rather than assuming a national average.

Who Can File Chapter 13

Chapter 13 is built for individuals with a steady, predictable income, since the whole case depends on making a fixed payment every month. You also have to fall under the debt ceilings. For cases filed on or after April 1, 2025, secured debts must be under $1,580,125 and unsecured debts under $526,700 — limits that are adjusted every three years. If your debts exceed them, Chapter 11 is the reorganization route instead.

Businesses can't file Chapter 13; it is a consumer chapter. Family farmers and fishermen have their own tailored option, Chapter 12 bankruptcy, which works much like Chapter 13 but is designed around seasonal income. If you're weighing the fresh-start speed of Chapter 7 bankruptcy against keeping your property, that trade-off is usually what decides the chapter.

What You Can and Can't Do During the Plan

Living under a confirmed plan comes with real limits. Your case stays open for years, and the trustee monitors your budget the whole time.

• You generally can't take on new debt without the trustee's or court's approval, including financing a car or a large purchase.
• You must stay current on both your plan payment and your ongoing secured payments, like the regular monthly mortgage.
• You must turn over increases in income in many districts, since a raise can change how much disposable income the plan requires.
• You can convert or dismiss the case. Under 11 U.S.C. § 1307 you have the right to convert to Chapter 7 or ask the court to dismiss your Chapter 13 case if your circumstances change.

One benefit stands out for families. The Chapter 13 co-debtor stay under 11 U.S.C. § 1301 protects anyone who co-signed a consumer debt with you, stopping creditors from chasing that person while your plan is active. Chapter 7 offers no equivalent shield.

Keeping Your Home and Car

The reason many people file Chapter 13 is right here: you keep your property. A Chapter 7 trustee can sell assets that aren't protected by an exemption. A Chapter 13 trustee does not. Instead, you hold onto your home, car, and other belongings and repay what you owe through the plan.

This matters most when you're behind on a mortgage. Chapter 13 lets you spread your past-due payments across the life of the plan while you keep making the regular monthly payment, which can stop a foreclosure and let you catch up over time. The same approach works for a financed vehicle. The catch is discipline: the protection lasts only as long as you keep paying. Fall behind on the plan or your ongoing loans, and a creditor can ask the court to lift the stay.

Chapter 13 Discharge and Timeline

A Chapter 13 case ends when you finish the plan. After you make every scheduled payment over the three-to-five-year term and complete a financial management course, the court grants a discharge under 11 U.S.C. § 1328 that wipes out most remaining balances. The discharge here can reach a few debts that Chapter 7 leaves behind, though core exceptions like most student loans, recent taxes, and domestic support obligations still survive.

The length of the case is the main trade-off. Chapter 7 is over in a few months; Chapter 13 asks for years of payments. For a clear-eyed look at whether the longer path fits your finances, read what Chapter 13 bankruptcy is and review your numbers with a professional. Because the plan is complex to draft and must survive court confirmation, most filers work with a bankruptcy lawyer rather than filing alone.