What is Chapter 13?

Chapter 13 bankruptcy is like a financial  reset button for people who have a steady income but are struggling to  keep up with their debts. It's often called a "Wage Earner" plan for  individuals who have too many assets or make too much to qualify for a  Chapter 7.  Instead of wiping out all your debts like in Chapter 7  bankruptcy, Chapter 13 lets you reorganize and set up a plan to pay back  some or all of what you owe over three to five years.

Here's how it works:

1. Create a Plan: You work with the court to create a repayment plan. This plan lays out  how much you'll pay each month, and it’s usually based on how much you  earn, how much you owe, and what you can afford.
2. Keep Your Stuff: Unlike Chapter 7, where you might have to sell off some of your  nonexempt property to pay your debts, Chapter 13 lets you keep your  house, car, and other important items as long as you stick to the  repayment plan.
3. Stay Protected: Once you file for Chapter 13, creditors can't hassle you about the  money you owe. They have to deal with the court and follow the repayment  plan.
4. Pay Over Time: You make monthly payments to a trustee (a person who manages your  case), who then pays your creditors. If you make all your payments on  time, at the end of the plan, any remaining qualifying debts might be  wiped out.

In short, Chapter 13 is a way to  catch up on your debts without losing everything, as long as you can  commit to making regular payments.