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Chapter 13 bankruptcy is a 'reorganization' filing under 11 U.S.C. Chapter 13 that lets you keep your assets while repaying creditors through a court-approved repayment plan. Unlike liquidation bankruptcy, you don't surrender property; instead, you commit your disposable income to a 3-5 year plan based on what you earn. The court and a trustee oversee the payments, which are distributed to your creditors over the plan's life. Filing triggers an automatic stay that can stop a foreclosure, giving you time to catch up on missed mortgage payments. Under the Fair Credit Reporting Act a bankruptcy can be reported for up to 10 years (15 U.S.C. § 1681c), which can affect your ability to borrow during that period. Whether this option fits your situation depends on your income, debt levels, and the property you want to protect, so outcomes vary by case.
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Wage Earner's Plan
Reorganization Bankruptcy
11 U.S.C. Chapter 13
Used in Context
- Facing a foreclosure sale date, she filed Chapter 13 bankruptcy to stop the process and spread her missed mortgage payments across a 5-year plan.
- Because he had steady income but couldn't cover all his debts at once, his attorney recommended Chapter 13 over liquidation so he could keep his car and home.
How long does Chapter 13 stay on your credit report?
Under the Fair Credit Reporting Act a bankruptcy, including Chapter 13, can be reported for up to 10 years (15 U.S.C. § 1681c). During that time it can affect your ability to qualify for new credit, but its impact often lessens as you rebuild and as the filing ages.
Can Chapter 13 stop a foreclosure?
Yes. Filing Chapter 13 triggers an automatic stay that can stop a foreclosure. The 3-5 year repayment plan lets you make up missed mortgage payments over time while keeping your home, though results depend on your income and plan approval.
Do you lose your property in Chapter 13?
No. Chapter 13 is a reorganization bankruptcy where you keep your assets and repay creditors through a court-approved 3-5 year plan based on your income. This differs from liquidation bankruptcy, where some property may be sold to pay creditors.
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