Chapter 13n.
A bankruptcy that reorganizes debt into a three-to-five-year repayment plan — used to keep a house, catch up on arrears, or when income is too high for Chapter 7.
Chapter 13 is the individual reorganization form of bankruptcy. Instead of liquidating assets, the debtor commits future income to a court-approved repayment plan lasting three to five years; completing the plan results in a discharge of remaining eligible debts.
It is chosen to cure mortgage arrears and keep a home, to protect non-exempt property, or when income is too high to qualify for Chapter 7. Debtors must have regular income and debts within statutory limits.
Federal law governs (11 U.S.C. §§ 1301 et seq.). Plans are administered by a standing Chapter 13 trustee in the debtor's district (Colorado or Wyoming). Completing a Chapter 13 plan without counsel is difficult; experienced representation materially improves the odds of a successful discharge.
Related terms
- Chapter 7The most common form of bankruptcy: eligible debts are wiped out in a few months, with exemptions protecting most or all of an honest debtor's property.
- automatic stayThe court order that takes effect the instant a bankruptcy is filed and immediately stops most collection efforts such as calls, lawsuits, garnishments, and foreclosures.
- dischargeThe court order that legally wipes out a debtor's personal liability for covered debts, and it is the goal of most bankruptcies and the heart of the fresh start.