How the 3-to-5-year repayment plan works, what you'll pay, how you protect your home and car, and what discharge looks like.
Chapter 13 bankruptcy, often called "reorganization bankruptcy," is a court-supervised repayment plan that lets you pay back some or all of your debts over three to five years while keeping all of your property. Unlike Chapter 7, there's no liquidation — you keep everything and pay creditors through a structured monthly plan based on your income and expenses.
Chapter 13 is the standard choice for homeowners who are behind on mortgage payments and want to catch up, for filers whose income is too high for Chapter 7, and for anyone with significant non-exempt property they want to protect. It's more powerful than Chapter 7 in many situations — and just as effective at stopping creditor action.
Chapter 13 has no income cap. The core requirement is regular income sufficient to fund a plan.
You must have regular income — a paycheck, self-employment income, Social Security, or other reliable source — sufficient to fund your monthly plan payments. Freelancers and contractors qualify as long as income is stable.
Your secured and unsecured debts must fall below federal Chapter 13 debt caps (currently over $2.75M combined). Most consumer filers are well under these limits. Your attorney confirms during the consultation.
You must wait 2 years between Chapter 13 filings, or 4 years between a prior Chapter 7 discharge and a new Chapter 13 filing. Most filers have no prior bankruptcy at all.
The same 180-day pre-filing credit counseling course required for Chapter 7. Your attorney will recommend an approved provider; most courses are online and take about an hour.
Your Chapter 13 plan payment is based on your income minus allowed expenses — your "disposable income" under the bankruptcy means test. That amount goes to a trustee each month, who distributes it to your creditors according to the plan. Secured debts (mortgage arrears, car loans) are paid first; unsecured debts (credit cards, medical bills) get whatever's left, often pennies on the dollar.
Chapter 13 can do things Chapter 7 cannot: catch up on a mortgage to stop foreclosure, cram down an underwater car loan, handle recent tax debt, and strip off second mortgages on homes where the first mortgage exceeds the home's value. These tools make Chapter 13 the clear choice for many homeowners even when they'd technically qualify for Chapter 7.
At the end of the 3-to-5-year plan, any remaining unsecured debt is discharged. You leave with your property intact, your mortgage current, and a fresh start on the debt that was holding you back. See our eligibility guide if you're not sure which chapter applies to you.
Meet with an attorney to review your income, debts, and goals. Your attorney designs a plan that meets court requirements and fits your budget, then files the petition and plan together.
Filing triggers the automatic stay. You begin making plan payments to the trustee starting 30 days after filing — even before the plan is confirmed by the court.
The trustee meets with you ~30–45 days after filing. A confirmation hearing follows where the judge approves the plan. Once confirmed, the plan is binding on all creditors.
You make plan payments for the full term (3–5 years), complete a second credit counseling course, and the court grants discharge. Remaining unsecured debt is wiped out; your property is yours free and clear.
Plans can be modified. If you lose a job or suffer a significant income drop, your attorney petitions the court to reduce or pause plan payments. If your income increases substantially, the trustee may ask to adjust payments upward. The plan isn't set in stone.
You keep your home as long as you make regular mortgage payments and plan payments. Mortgage arrears are cured through the plan over 3–5 years. At plan completion, you're fully caught up on the mortgage as if you'd never missed a payment.
It's based on disposable income (gross income minus allowed expenses under federal and state standards). The payment must also be enough to cure any mortgage or car arrears over the plan term. Your attorney calculates the exact number during the consultation.
Yes. If your circumstances change and you can no longer afford plan payments — job loss, medical crisis, divorce — your case can be converted to Chapter 7. You still get a discharge, but without the repayment plan. Conversion is an important safety net.
An attorney can build a sample plan based on your actual income and debts in a no-obligation consultation.