Definition
A federal repayment-plan bankruptcy: you keep your property and pay creditors what your budget allows over three to five years, after which most remaining unsecured debt is discharged. Often used to stop a foreclosure and catch up on a mortgage or car loan.
Why it matters
Chapter 13 exists for people with steady income who need time and legal protection, not forgiveness of everything. It can be the difference between catching up on a home and losing it, and it leaves the credit report sooner than Chapter 7 (up to seven years).
Example
A homeowner three months behind on a $1,600 mortgage payment files Chapter 13. The $4,800 of arrears is spread across a five-year plan alongside regular payments, the foreclosure stops, and eligible unsecured debts are handled through the same plan.
Put it into practice
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.