Chapter 13 Bankruptcy

Chapter 13 bankruptcy, sometimes called a reorganization, requires payment of the consumer's debts through a payment plan based on the consumer’s disposable income (income available after a debtor meets their household needs). The payment plan usually lasts between three and five years.

Debtors in Chapter 13 have certain rights that debtors in chapter 7 do not. For example, they can end a foreclosure or repossession of an asset, if they can present a plan upon which a creditor can agree. Chapter 13 debtors can retain their motor vehicles, and they can stay in their primary residence. In a chapter 13 bankruptcy, it is possible to remove a second mortgage from a property, or force a creditor to accept fair market value on a property.

For more information, see the US Bankruptcy Court website.