Chapter 13 of the U.S. Bankruptcy Code provides a debtor with an opportunity to pay off its debts through a court approved payment plan. The Chapter 13 procedure allows a debtor to repay some or all of its debts over a period of three to five years. Typically, the Chapter 13 debtor possesses the ability to repay some or all of their debt but requires time to do so. The benefit received from filing a Chapter 13 bankruptcy petition is that a debtor can keep all of his or her property (typically their home and car), including those valuable assets, which are not exempt.  One of the additional benefits of chapter 13 bankruptcy is interest and late fees do not accrue in a chapter 13 payment plan.

A common scenario in which a debtor will utilize the Chapter 13 option is when the debtor is behind on its mortgage payments. Chapter 13 bankruptcy will stop a foreclosure proceeding and give the debtor the right to pay back the past due payments over a period of up to sixty (60) months. As part of the payment plan, a debtor is required to pay back a percentage (or all) of the unsecured debt.

Upon the completion of the plan, the debtor will receive a discharge of debts and will be able to keep their property.