Chapter 13 bankruptcy — formally called a "wage earner's plan" — allows individuals with regular income to restructure their debts and repay them over a three-to-five-year period. Unlike Chapter 7, Chapter 13 does not require liquidating assets. Its most powerful feature for homeowners: it is the only bankruptcy chapter that allows you to cure mortgage arrears and save a home that is already in foreclosure.
In 2025, 207,889 Chapter 13 cases were filed in the United States, according to the Administrative Office of the U.S. Courts — a 5.4 percent increase from 2024.1
How the Automatic Stay Stops Foreclosure
The moment a Chapter 13 petition is filed, an automatic stay under 11 U.S.C. § 362 immediately halts all collection activity, including:
- Foreclosure sales and proceedings
- Wage garnishments
- Creditor lawsuits and judgments
- Repossessions
- Utility disconnections (for 20 days)
If a foreclosure sale was scheduled for tomorrow and you file today, the sale is stopped. This gives you time to propose a repayment plan that cures the arrears over the life of the plan.
The Chapter 13 Repayment Plan
Within 14 days of filing, you must submit a proposed repayment plan to the court. The plan must:
- Provide for payment of all "priority" debts in full (taxes, domestic support obligations)
- Cure all mortgage arrears over the plan period
- Pay ongoing mortgage payments directly (or through the trustee)
- Distribute at least as much to unsecured creditors as they would receive in a Chapter 7 liquidation
- Commit all "disposable income" (income minus allowed expenses) to the plan
Plans run 3 years if your income is below the state median, or 5 years if above. A confirmed plan is binding on all creditors — they cannot pursue collection outside the plan.
Chapter 13 Debt Limits (2025)
To file Chapter 13, your debts must not exceed statutory limits. As of 2025, the limits are:
| Debt Type | 2025 Limit |
|---|---|
| Secured debts (mortgages, car loans) | No limit (removed by SBRA 2019 for individuals) |
| Unsecured debts (credit cards, medical bills) | No limit (removed by SBRA 2019 for individuals) |
Note: The Small Business Reorganization Act of 2019 and subsequent amendments eliminated the prior debt caps for individual Chapter 13 filers. Confirm current limits with your attorney, as Congress periodically adjusts these thresholds.
Chapter 13 vs. Chapter 7: Which Is Right for You?
| Factor | Chapter 7 | Chapter 13 |
|---|---|---|
| Timeline | 3–6 months | 3–5 years |
| Asset protection | Exempt assets only | All assets (keep everything) |
| Mortgage arrears | Cannot cure arrears | Can cure arrears over plan period |
| Income requirement | Must pass means test | Must have regular income |
| Non-dischargeable debts | Remain after discharge | Can pay over time in plan |
| Credit report impact | 10 years | 7 years |
The Chapter 13 Discharge
Upon successful completion of the repayment plan, the court issues a discharge of remaining eligible unsecured debts. Chapter 13 can discharge certain debts that Chapter 7 cannot, including:
- Debts arising from property settlements in divorce (non-support obligations)
- Certain tax debts paid through the plan
- Debts from willful and malicious injury to property (not persons)
Completion rate matters: Studies show that approximately 33–40 percent of Chapter 13 plans are successfully completed. Working with an experienced bankruptcy attorney significantly improves your odds of plan confirmation and completion.
Next Steps
If you are facing foreclosure or have assets you want to protect, Chapter 13 may be the right tool. Speak with a licensed bankruptcy attorney in your state as soon as possible — the earlier you file, the more time the automatic stay has to work.
Find a Chapter 13 bankruptcy attorney near you →
Sources & Citations
- Administrative Office of the U.S. Courts. Bankruptcy Filings Rise 11 Percent. February 4, 2026. uscourts.gov
- 11 U.S.C. § 362 — Automatic Stay. uscode.house.gov