FAQ
What Is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy reorganizes debt into a three-to-five-year repayment plan so you can keep your property. Learn what it means to file Chapter 13.
3 min read · Last verified 2026-07-03
Chapter 13 bankruptcy reorganizes your debt into a court-approved repayment plan that lasts three to five years, and unlike Chapter 7 it lets you keep all of your property. It is built for people with regular income who can catch up on what they owe over time rather than wipe it out at once.
What Is Chapter 13 Bankruptcy?
Chapter 13 is the "reorganization" chapter of the U.S. Bankruptcy Code. Instead of liquidating your assets, you propose a plan to repay some or all of your debts from your future income. In exchange, you keep your property and, once you finish the plan, the court discharges most remaining balances under 11 U.S.C. § 1328.
The moment you file, the automatic stay under 11 U.S.C. § 362 stops most collection activity, including calls, lawsuits, wage garnishment, and foreclosure. That breathing room is why Chapter 13 is such a common tool for catching up on mortgage arrears, car payments, or tax debt. For a full walkthrough of the process, timeline, and forms, see the complete guide to filing for Chapter 13 bankruptcy.
How the Repayment Plan Works
You make a single monthly payment to a trustee, who distributes the money to your creditors according to a plan the court confirms. The rules for what a plan must contain are set by 11 U.S.C. § 1322, and the court reviews the plan for good faith, feasibility, and fair treatment of creditors before confirming it under 11 U.S.C. § 1325.
The plan length is fixed by law at three to five years. If your income is below the median for your state and household size, you can generally propose a three-year plan. If it is above the median, the plan runs five years. Priority debts like recent taxes and support obligations are paid in full through the plan, while unsecured creditors such as credit card companies often receive only a fraction of what they are owed.
In effect since December 2020. Attorney fees are usually paid through the plan.
Who Can File Chapter 13
Two conditions matter most. First, you need regular income reliable enough to fund the monthly plan payment. Second, your debts must fall within the statutory ceilings.
| Debt type | Limit |
|---|---|
| Secured debts | $1,580,125 |
| Unsecured debts | $526,700 |
These figures are adjusted every three years. Someone whose debts exceed either ceiling generally cannot use Chapter 13 and would look at Chapter 11 instead. Because eligibility and plan payments depend partly on your state's median income and exemption rules, the details vary from state to state; compare your options on the state bankruptcy pages.
Chapter 13 vs Chapter 7
The two consumer chapters solve different problems. Chapter 7 erases eligible unsecured debt in a few months but requires passing a means test and risks any property that exemptions do not cover. Chapter 13 keeps everything and reorganizes what you owe, which also lets you cure a mortgage default that Chapter 7 cannot fix.
| Feature | Chapter 13 | Chapter 7 |
|---|---|---|
| Type | Reorganization | Liquidation |
| Duration | 3-5 years | 3-4 months |
| Property | All property kept | Non-exempt assets may be sold |
| Filing fee | $313 | $338 |
If you are still deciding which fits your situation, read the fuller Chapter 7 vs Chapter 13 comparison, or start with the basics of what bankruptcy is and how the chapters differ. People who want to erase debt quickly and pass the income test often prefer Chapter 7; those protecting a home or a car they have fallen behind on usually turn to Chapter 13.
Related Questions
Sources
- 11 U.S.C. § 1322 — Contents of plan (Chapter 13)
- 11 U.S.C. § 1325 — Confirmation of plan (Chapter 13)
- 11 U.S.C. § 1328 — Discharge (Chapter 13)
- 11 U.S.C. § 362 — Automatic stay